The International Sustainability Standards Board (ISSB) will begin researching disclosure about risks and opportunities associated with human capital, biodiversity, ecosystems and ecosystem services.
In an April 23 statement, ISSB says it will build on relevant pre-existing initiatives. This includes those already under its purview — the Sustainability Accounting Standards Board (SASB) Standards and Climate Disclosure Standards Board (CDSB) guidance. It will also refer to “relevant aspects” of the work of the Task Force on Nature-related Financial Disclosures (TNFD).
ISSB expects to publish in June a summary of the feedback on its agenda consultation, together with its response to the feedback and its work plan for the next two years.
TNFD, in an April 24 statement, says it welcomes the ISSB’s decision to start work on nature-related issues.
This is a “critical next step” in developing the global baseline for sustainability reporting, says TNFD, following the release of the ISSB’s IFRS S1 and IFRS S2 sustainability reporting standards in June 2023.
The move follows the release of TNFD’s recommendations in September 2023, the rollout of the European Sustainability Reports Standards (ESRS) and January’s update to the GRI biodiversity standard, codenamed “GRI Biodiversity 101”.
See also: CDL, UOB among 320 organisations that pledge to make nature-related disclosures by FY2025
Incorporating nature-related issues into the global reporting baseline will provide investors and report preparers with “a more integrated approach” across governance, strategy, risks management and metrics and targets, says TNFD. These are the four pillars of TNFD’s 14 disclosure recommendations.
The move will also help realise Target 15 of the Global Biodiversity Framework, which called for nature-related corporate reporting of risks, dependencies and impacts. The target is part of the Kunming-Montreal Global Biodiversity Framework, which was adopted by over 190 countries at the 2022 United Nations Biodiversity Conference in December 2022.
The framework features 23 targets to be met by 2030 and four global goals to preserve biodiversity for current and future generations.
See also: TNFD framework launch floats nature-related risks to corporates' attention
Human rights excluded
Through its research, ISSB says it will assess and define limitations with current disclosures, identify possible solutions and decide whether standard-setting is required.
ISSB’s priority for the next two years will be supporting the implementation of the ISSB’s inaugural standards — IFRS S1 and IFRS S2.
Following market feedback, the ISSB decided not to embark on projects related to risks and opportunities associated with human rights — beyond risks and opportunities relating to a company's own workforce and workers in its value chain — or integration in reporting at this time.
“However, ISSB agreed to closely monitor developments in these important areas and may consider including them in a future agenda consultation,” says the board.
Consistent with TCFD, ISSB
The TNFD says its recommendations have already been designed to be consistent with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), and with the ISSB’s IFRS S1 and IFRS S2 standards.
See also: ISSB standards 'best chance we have' at consistent sustainability reporting: SGX RegCo
Companies using the TNFD recommendations and guidance are “well-placed” to report against ISSB’s coming standards on nature and biodiversity, says TNFD.
Furthermore, TNFD says its recommendations “have already informed” the reporting landscape in Europe and the GRI impact reporting standards used by companies worldwide.
The science is clear that climate change and nature loss are accelerating, says David Craig, co-chair of the TNFD. “Market research is increasingly spotlighting how our dependencies and impacts on nature are creating material financial risks and also opportunities for companies across real economy sectors as well as for financial institutions.”
TNFD was launched in June 2021 with the support of the G20 Sustainable Finance Working Group and financial support from a number of governments and philanthropic foundations.
The Taskforce comprises 40 senior executives from leading financial institutions, corporates and market service providers, with combined assets of over US$20 trillion. 20 knowledge partners support the work of the Taskforce.
SGX Group is part of the 1,400-strong TNFD Forum, which supports the work of the Taskforce.
In September 2023, after a two-year design and consultation phase with market participants, the TNFD published its disclosure recommendations and supporting implementation guidance to encourage and enable business and finance to assess, report and act on their nature-related dependencies, impacts, risks and opportunities, aligned to Target 15 of the Global Biodiversity Framework.
Over 370 organisations from more than 45 countries representing in excess of US$15 trillion in assets under management (AUM) have already committed to start making disclosures based on the TNFD recommendations.
They include Singapore’s City Developments Limited, United Overseas Bank (UOB) and Olam Agri, who have committed to start making nature-related disclosures by the end of FY2024, FY2025 and FY2025 respectively.
With its corporate reporting recommendations published, the Taskforce is now focused on encouraging and enabling voluntary market adoption and supporting efforts to address the knowledge, capacity-building and data needs of market participants.
