ISSB and TNFD strengthen collaboration on nature-related disclosures

The IFRS Foundation, which is behind the ISSB standards used for sustainability disclosures to investors, and the Taskforce for Nature-related Financial Disclosures (TNFD) have signed an agreement to enable reliable nature-related disclosures for capital markets.

The memorandum of understanding (MoU) signed this week means both parties will work together to build on the TNFD recommendations and integrate these, where relevant, into ISSB recommendations for disclosures to capital markets.

ISSB standards – now the most widely used framework to disclose climate and sustainability impacts and opportunities to investors – are being adopted by regulators across the world for mandatory reporting. 

Shaping the next generation of disclosure standards

In April last year, the organisation started to look into potential new disclosures around nature and social impacts, with the aim of determining the type of information investors need to assess nature and human capital risks within their portfolios. This effort also involved drawing from the work of TNFD, which ISSB has been supporting as a knowledge partner since late 2021.

The MoU signed in Frankfurt this week now formalises and strengthens the collaboration between the two organisations. Under the agreement, ISSB and TNFD will share research, knowledge and technical expertise to inform both the ISSB’s work on nature disclosures and nature-related aspects of its SASB standards enhancement work.

Any new standard that results from this collaboration on nature disclosure will then be subject to the IFRS Foundation’s due process, including public consultation on any resulting proposals.

Reducing fragmentation in sustainability disclosures

Sue Lloyd, ISSB Vice-Chair, said: “Our collaboration with the TNFD is a clear signal to the market that we are committed to reducing fragmentation in sustainability disclosure while meeting the need for relevant and high-quality information for capital markets. Strengthening the global baseline of sustainability disclosures with nature-related disclosures to meet investors’ information needs, including enhancing the industry-based SASB Standards, is a core focus of our work plan, and this ongoing collaboration and sharing of research and expertise will propel our work forward more effectively.”

David Craig, Co-Chair of the TNFD, added: “Like the TCFD before us, the TNFD was initiated ahead of specific reporting standards to develop market-based recommendations for decision-useful and practical corporate reporting practices on nature-related aspects beyond GHG emissions. Having engaged thousands of market participants in the development of our recommendations over the past four years from across 50 jurisdictions and with first-generation TNFD reports now published from among the 500 TNFD Adopters, we welcome this deepened collaboration with the ISSB to inform their evolving sustainability reporting standards. One of the objectives of the TNFD is to help achieve Target 15 of the Kunming-Montreal Global Biodiversity Framework and we believe that better disclosures about nature issues, which will result from our collaboration with the ISSB, will support the achievement of that goal.”