ISSB nature-related disclosures: what the draft Practice Statement proposes
On 22 October 2026 the International Sustainability Standards Board (ISSB) published proposals for nature-related disclosures. They take the form of a draft Practice Statement to be used alongside IFRS S1 and S2, built heavily on the TNFD recommendations, and they are open for comment until 19 February 2027. This guide explains what is proposed, what is optional, how it connects to climate reporting under IFRS S2 and what companies already reporting on emissions can do now.
What the ISSB has published
The exposure draft is titled IFRS Sustainability Disclosure Practice Statement 1 Nature-related Disclosures. It comes with a Basis for Conclusions, accompanying guidance with illustrative examples, and a snapshot. The comment period is 120 days and closes on 19 February 2027.
The ISSB's starting point is a gap in its own standards. IFRS S1 already requires companies to disclose material information about all sustainability-related risks and opportunities, but neither IFRS S1 nor IFRS S2 contains requirements specific to nature. Climate has its own standard; biodiversity, water, land use and ecosystems do not. The draft Practice Statement is meant to fill that gap with specific content, so that companies tell investors how their dependencies and impacts on nature give rise to risks and opportunities for the business.
Why a Practice Statement rather than a new standard
The form matters. A company does not have to apply a Practice Statement in order to state compliance with ISSB Standards. In other words, the proposals would not add a new obligation for companies or jurisdictions that are still implementing IFRS S1 and S2. The ISSB says that, from a content and drafting perspective, there is no difference between a Practice Statement and a Standard; the difference is whether applying it is a condition of compliance.
Two routes to application follow from this:
- Voluntary. A company can choose to apply the Practice Statement, and the draft proposes that it would be available for use from the date it is issued, with initial application from the start of an annual reporting period.
- Required by a jurisdiction. A regulator can require it. A jurisdiction that adopts the ISSB Standards does not have to mandate it.
The ISSB is also asking respondents whether it should finalise the content as a Practice Statement or issue it in another form, such as amendments to IFRS S1 or S2 or a separate standard. The final form is therefore not settled.
What the proposals would require
The draft keeps the structure every ISSB reporter already knows: governance, strategy, risk management, and metrics and targets. What changes is the subject matter and, above all, the importance of location.
Definitions
The draft defines nature-related risks and opportunities, splits risks into physical and transition risks (as IFRS S2 does for climate), and uses the terms "environmental resources" and "ecosystem services". Choosing "environmental resources" rather than "environmental assets" is deliberate, to avoid confusion with assets in the financial statements.
Location throughout the value chain
Nature risks depend on place in a way that most climate risks do not. A tonne of CO₂ has the same effect wherever it is emitted; water withdrawal in a water-stressed basin is a very different risk from the same withdrawal elsewhere. The draft therefore asks companies to consider the location of their assets and activities throughout the value chain when identifying nature-related risks, and to think about the right geographical scale at which to present information. It also emphasises interactions with Indigenous Peoples, local communities and other affected stakeholders.
Identifying risks: LEAP is optional
The TNFD's LEAP approach (Locate, Evaluate, Assess, Prepare) is referred to as one way of identifying nature-related risks and opportunities, but it is not mandatory. Companies already using LEAP for TNFD reporting should be able to reuse that work.
Strategy and resilience
Companies would explain how they have responded, and plan to respond, to nature-related risks. A nature-related transition plan is not required. Resilience would be assessed using nature-related scenario analysis, which the ISSB expects to be more location- and asset-specific than climate scenario analysis; qualitative scenario narratives are allowed where appropriate.
Metrics and targets
The cross-industry metric proposed for all companies, when material, is the amount and percentage of assets or business activities vulnerable to nature-related risks, alongside those aligned with nature-related opportunities. Information can be aggregated or broken down, including by location, and a proportionality mechanism ("without undue cost or effort") applies. Beyond that, companies would consider industry-based metrics, drawing on the SASB Standards, and may refer to the TNFD's disclosure metrics. The ISSB asks whether some TNFD core global metrics, such as total spatial footprint or extent of land, freshwater and ocean-use change, should become required; at present they are not.
How it connects with climate reporting under IFRS S2
Climate-related risks stay in IFRS S2. The Practice Statement is to be applied together with the ISSB Standards and asks companies to show the connections between nature and climate: for example, how deforestation in a supply chain affects both emissions and resource availability, or how a water constraint affects a decarbonisation project. For companies that already measure Scope 1, 2 and 3 emissions by site and supplier, much of the location data the proposals need already sits in the GHG inventory. See our guide to IFRS S1 and S2 for the climate requirements themselves.
TNFD, ESRS E4 and GRI
The ISSB says it has drawn extensively on the work of the Taskforce on Nature-related Financial Disclosures, and the TNFD has said it has completed its own technical work on assessment and disclosure. Companies applying the European Sustainability Reporting Standards or the GRI Standards would be allowed to refer to them when applying the Practice Statement, and the ISSB says it has worked to make reporting under both efficient. The difference in lens remains: ESRS E4 is reported under double materiality, covering impacts on nature for their own sake, while the ISSB proposals focus on what matters to investors. A double materiality assessment that already scores biodiversity, water and land use gives a head start on both.
What to do before February 2027
- Decide whether to respond. The ISSB invites comments through an online survey or a comment letter. Questions cover the overall approach, definitions, LEAP, location, the metrics, targets and the final form.
- Map your locations. List owned sites and key supplier locations with coordinates. Most nature-related analysis starts here, and the same list supports Scope 3 supplier engagement.
- Check materiality. Revisit whether biodiversity, water and land use are material to your business and your value chain, using the same process you use for other topics.
- Connect the data. Keep nature-related indicators in the same governed dataset as your climate data, with owners, evidence and approvals, so the connections the draft asks for can be shown rather than asserted.
Frequently asked questions
Are nature-related disclosures mandatory under the ISSB Standards?
Not under the current proposals. A company can state compliance with ISSB Standards without applying the Practice Statement. It becomes mandatory only if a jurisdiction requires it.
Does the draft replace TNFD?
It is built on the TNFD's recommendations and allows the TNFD's LEAP approach and metrics to be used, but it is an ISSB document applied alongside IFRS S1 and S2.
Is a nature transition plan required?
No. Companies would describe how they respond to nature-related risks, but the proposals do not require a nature-related transition plan.
When does the comment period close?
On 19 February 2027, 120 days after publication.
