15 institutions urge ISSB to make nature reporting mandatory

Fifteen financial institutions, including Federated Hermes, Nordea Asset Management and Rabobank, submitted a letter urging the IFRS Foundation's International Sustainability Standards Board to develop a mandatory, standalone standard for corporate nature-related reporting. The letter was released through the Finance for Biodiversity Foundation.

The ISSB consultation on proposed nature-related disclosure requirements launched the previous week. The board set out those requirements as a non-mandatory Practice Statement. Signatories said voluntary requirements risk leaving investors with fragmented and inconsistent information on material nature risks and opportunities. They warned that jurisdictions may diverge, with some waiting for further standard setting, others addressing nature through IFRS S1 and S2, and some making the practice statement, or parts of it, mandatory.

For allocators, the default matters: as proposed, the nature text is guidance a company can apply in full, in part, or not at all. Comparing nature dependencies across a global portfolio therefore remains a holding-by-holding exercise. A jurisdiction that adopts the practice statement can make it mandatory, the ISSB has said. Even then, the baseline investors compare against would differ by market.

In April, the ISSB said it would proceed with the proposed nature-related requirements as an IFRS Practice Statement, to minimize disruption for companies implementing its existing standards.

The consultation asks whether nature-related content should be issued in another form, such as a standalone mandatory standard. The signatories said they welcomed the ISSB's work on nature disclosure and recognized the considerations behind the practice statement decision, but argued that "a dedicated Nature Standard should remain the intended outcome," warning that otherwise "we risk fragmentation and inconsistency across different jurisdictions."

The ISSB said last year that it would begin standard setting on nature-related risks and opportunities, after publishing IFRS S1 and IFRS S2 in 2023. As ESG Capital Daily previously reported, the draft would let a company claim compliance with ISSB Standards without following the proposed Practice Statement. The consultation runs to Feb. 19, 2027.