ISSB chooses Practice Statement over mandatory nature disclosure

The International Sustainability Standards Board (ISSB) has ignited a firestorm among environmental campaigners, scientists, and investors by proposing non-mandatory guidance on nature-related disclosures instead of a binding sustainability standard. In a decision announced last week, the ISSB opted to develop an IFRS Practice Statement rather than a standalone mandatory standard for nature.

This move marks a significant pivot from expectations that the ISSB would deliver a rigorous, enforceable global standard for biodiversity and nature risk, similar to its landmark IFRS S2 climate standard.

Why the ISSB chose a Practice Statement

The ISSB justified its decision by arguing that:

• A Practice Statement won’t disrupt ongoing implementation of IFRS S1 and S2. Emmanuel Faber, ISSB Chair, stated: “Providing material nature-related disclosures is not optional; IFRS S1 already requires that”
• The ISSB left the door open for a mandatory standard later, and will ask stakeholders in its October 2026 consultation whether a Practice Statement is the right approach
• Companies applying the Practice Statement would receive “the full effect of an ISSB Standard”

The ISSB plans to publish an exposure draft for public comment in October 2026, drawing heavily on the Taskforce on Nature-related Financial Disclosures (TNFD) framework.

For data analysts and wider investment teams, this means nature-related disclosures will remain voluntarily adopted guidance rather than compulsory reporting, making way for fragmentation in how companies disclose biodiversity risks.

“Regressive, Out of sync with science”: Global campaigners hit back

The backlash has been swift and severe. A coalition of WWF International, Conservation International, Finance for Biodiversity Foundation, and Nature Positive Initiative published an open letter condemning the decision as “regressive” and “clearly out of sync with today’s science”.

Key criticisms from campaigners:

• Half of global GDP depends on nature, yet the ISSB won’t require disclosure of nature risk
• A voluntary framework risks fragmenting disclosures and slowing capital market alignment
• The decision ignores scientific recommendations for integrating climate and nature reporting
• It undermines Target 15 of the Kunming-Montreal Global Biodiversity Framework, which calls for mandatory corporate biodiversity disclosures

Marco Lambertini, Executive Chair of the Nature Positive Initiative, said:

“We stand ready to support the development of a strong Practice Statement, moving towards the introduction of a nature standard for mandatory reporting as soon as possible—for nature as much as for people, business and investors. We all depend on a healthy planet.”

Critics argue the ISSB is actively maintaining a disclosure framework built on a “fiction”, reporting climate risk without acknowledging nature’s foundational role.

Takeaways for Investment teams

For SI Engage’s audience of investment professionals, the implications are significant in terms of:

Inconsistent data quality: Without mandatory standards, nature disclosures will vary widely across companies, complicating comparative analysis

Increased due diligence burden: Investment teams must manually assess nature risks using disparate frameworks (TNFD, internal models, sector-specific guidance)

Regulatory uncertainty: The EU and other jurisdictions may move toward mandatory nature reporting regardless of ISSB’s voluntary approach

Future-standard risk: If the ISSB eventually adopts a mandatory nature standard (as it hinted), companies lagging in voluntary disclosure may face steep catch-up costs

The ISSB’s decision essentially kicks the can down the road, prioritising short-term implementation stability over the urgent, science-backed need for standardised nature reporting.

While the ISSB insists nature disclosure “is not optional” under IFRS S1, the lack of a binding standard leaves a critical gap in global sustainability reporting. For investors relying on comparable, auditable ESG data, this voluntary approach is a raw deal, and campaigners are unlikely to let the ISSB forget it.

Stay tuned as SI Engage continues to track the October 2026 exposure draft and developments in nature-related reporting standards.