Nature Reporting: What COP17 and the ISSB mean for business

The past fortnight has brought several developments in nature reporting. With COP17, the 17th meeting of the Conference of the Parties to the Convention on Biological Diversity, underway in Yerevan, new guidance is shaping how companies assess, measure and report on nature.

The Nature Positive Initiative has published a common set of State of Nature indicators and metrics. The Science Based Targets Network (SBTN) has released version 2.0 of its methods for setting corporate nature targets. The Taskforce on Nature-related Financial Disclosures (TNFD) has updated its LEAP assessment guidance, with greater attention to measuring the state of nature, assessing risks and connecting nature to transition planning.

These developments address a practical problem: businesses have been asked to assess their relationship with nature, but the methods for identifying risks, measuring environmental change and setting credible targets have not always aligned.

On 22 October, the International Sustainability Standards Board (ISSB) released its Exposure Draft for IFRS Sustainability Disclosure Practice Statement 1: Nature-related Disclosures. Drawing heavily on TNFD, the proposal sets out guidance for connecting nature-related dependencies and impacts with financial risks and opportunities. The consultation closes on 19 February 2027.

How does the ISSB proposal build on existing standards?

Under IFRS S1, companies already disclose material sustainability-related risks and opportunities, including those involving nature, where they could reasonably be expected to affect cash flows, access to finance or cost of capital. IFRS S2 also captures nature-related aspects of climate risks and opportunities.

The ISSB has not proposed a new standard or amendments to IFRS S1 and IFRS S2. Instead, it has proposed a Practice Statement that sits alongside these standards and provides more specific guidance on nature-related financial disclosures.

Applying the Practice Statement would be optional unless a jurisdiction makes it mandatory. Companies choosing to assert compliance would need to meet all its requirements and apply it alongside IFRS S1 and IFRS S2.

A Practice Statement is not an IFRS Sustainability Disclosure Standard. However, the ISSB explains that applying it has the same effect on a company's financial reporting as applying an ISSB Standard. The consultation also asks whether the proposals should be finalised as a Practice Statement or issued in another form, such as a Standard.

What are the six key elements of the ISSB proposal?

1. Location matters. The draft asks companies to consider where their assets and activities sit across their value chains and the characteristics of nature in those locations. A water dependency in one catchment is not necessarily equivalent to the same dependency elsewhere. Companies would also consider sensitive locations, including areas important for biodiversity and areas experiencing water stress.
2. Dependencies and impacts need a financial explanation. Companies would explain how their dependencies and impacts on nature create risks or opportunities that could affect their financial prospects. The proposal remains focused on financial materiality for investors; it does not introduce a double-materiality requirement.
3. People and place are connected. The draft addresses engagement with Indigenous Peoples, Local Communities and other affected stakeholders when identifying and managing nature-related risks.
4. Climate and nature risks interact. Companies would explain how climate-related and nature-related risks affect each other, including potential synergies and trade-offs. Wetlands, for example, can help manage flood exposure, while a renewable energy project may face ecological constraints linked to land use.
5. Scenario analysis is required. Companies applying the Practice Statement would use nature-related scenario analysis to assess the resilience of their strategies and business models to nature-related uncertainties. The draft provides the same reliefs available for climate-related scenario analysis under IFRS S2, taking account of available information and a company's capabilities and resources.
6. Investors get clearer information about exposure. The draft proposes disclosing the amount and percentage of assets or business activities vulnerable to nature-related risks, as well as those aligned with nature-related opportunities. It also asks for location-specific information about targets, including whether they are informed by law or regulation.

Companies are directed to refer to and consider the applicability of relevant SASB metrics when identifying metrics for nature-related risks and opportunities. TNFD metrics may also be considered where they support IFRS S1 and do not conflict with ISSB requirements. The TNFD's LEAP approach is recognised as a useful assessment process, but its use is not compulsory.

Why has the ISSB proposed a Practice Statement?

A Practice Statement is a deliberate and well-considered compromise. The ISSB wants more comparable nature-related information without disrupting jurisdictions still implementing IFRS S1 and S2. It can learn from voluntary application before deciding whether some or all of the content should eventually become a formal standard. That choice is itself part of the consultation. That matters for the more than 800 companies globally already committed to TNFD: the intention is to build on existing work rather than create another reporting silo. 

For Australia, there is a particularly important boundary. Nothing in this announcement changes mandatory AASB S2 reporting or makes standalone nature disclosure compulsory. AASB S1 remains voluntary. But AASB S2 already recognises that climate change can lead to loss of biodiversity, changes in soil productivity and reduced water availability. Nature is not automatically outside a climate assessment simply because it is nature. 

We'll explore that Australian connection in a separate article, including what organisations could sensibly start doing now without mistaking a proposed international Practice Statement for an Australian reporting obligation. 

For the moment, the significance is that the tools for nature reporting are becoming more coherent: better methods to assess impacts and dependencies, more consistent ways to measure change, and now a proposal to connect those findings to investor-focused disclosures. There's still plenty to work through, especially around scenario analysis and what investors can reliably infer from exposure metrics.