Nature-related financial disclosures are moving closer to becoming a mainstream component of corporate reporting after the International Sustainability Standards Board agreed to incorporate elements of the Taskforce on Nature-related Financial Disclosures framework into forthcoming implementation guidance for IFRS S1. The decision, announced following the ISSB’s meeting on 24–25 June, signals an important step towards harmonising global sustainability reporting and strengthening the integration of nature-related risks into financial disclosures.
The Board’s preliminary decisions will underpin a proposed IFRS Practice Statement on nature-related disclosures, expected to be released for public consultation in October 2026. Rather than creating a standalone mandatory reporting standard, the ISSB has opted to develop practical implementation guidance that complements existing IFRS Sustainability Disclosure Standards while providing companies with a consistent framework for reporting nature-related risks and opportunities.
The approach reflects growing recognition among regulators, investors and financial markets that biodiversity loss, ecosystem degradation and natural capital dependencies present material financial risks capable of influencing corporate performance, enterprise value and long-term investment decisions. The ISSB confirmed earlier this year that it would not immediately pursue a dedicated IFRS nature standard, choosing instead to build upon the existing requirements contained within IFRS S1 and IFRS S2. The proposed Practice Statement is intended to help organisations apply these standards consistently without disrupting implementation efforts already underway across multiple jurisdictions.
One of the most consequential decisions concerns the role of the TNFD framework. According to the ISSB, companies will be permitted to use TNFD-aligned metrics where these support the objectives of IFRS S1 and do not conflict with existing ISSB requirements. While the decision stops short of incorporating the TNFD framework directly into IFRS Standards, it effectively establishes the framework as a central reference point for organisations seeking to disclose nature-related financial information. The decision is expected to reduce uncertainty for companies that have already begun implementing TNFD recommendations since the framework’s global launch in 2023.
Many multinational corporations, financial institutions and asset managers have invested significantly in developing internal systems capable of assessing biodiversity impacts, ecosystem dependencies and nature-related financial risks. By recognising TNFD metrics within the IFRS reporting architecture, the ISSB provides greater assurance that these investments will remain relevant as global reporting practices continue to evolve. ISSB Vice-Chair Sue Lloyd said the proposed Practice Statement represents an opportunity to reduce fragmentation across the sustainability reporting landscape while leveraging existing market frameworks.
She noted that drawing upon the TNFD recommendations enables the ISSB to strengthen nature-related disclosures without disrupting adoption of IFRS Sustainability Disclosure Standards worldwide, while leaving open the possibility of a dedicated reporting standard in the future.
The implications extend beyond technical reporting requirements. Nature-related disclosures are increasingly becoming an important component of financial risk management as investors seek more comprehensive information regarding companies’ exposure to biodiversity loss, water scarcity, land degradation, ecosystem services and natural resource dependencies. Unlike traditional environmental reporting, which often focused on voluntary sustainability initiatives, the emerging reporting landscape increasingly frames nature as a financial issue capable of affecting corporate resilience, supply chain continuity, operating costs and long-term profitability. This evolution reflects broader developments across global financial markets. Institutional investors managing trillions of dollars in assets are placing increasing emphasis on nature-related risks alongside climate-related disclosures. Development finance institutions, commercial lenders and insurers are also expanding their assessment of environmental risks beyond greenhouse gas emissions to include biodiversity, water security and ecosystem resilience.
For African economies, the growing integration of nature into global financial reporting frameworks carries significant implications. The continent possesses some of the world’s richest biodiversity assets alongside extensive forests, wetlands, marine ecosystems and agricultural landscapes that underpin economic activity across multiple sectors. Agriculture, mining, tourism, forestry, fisheries and infrastructure development all depend heavily on healthy ecosystems and natural capital. As international capital markets increasingly incorporate nature-related considerations into investment decisions, African companies operating within these sectors may face rising expectations regarding transparency over environmental dependencies, biodiversity impacts and ecosystem management. This is particularly relevant for export-oriented industries supplying international markets where investors, regulators and customers are demanding greater sustainability disclosure.
Financial institutions operating across Africa are also likely to experience increasing pressure to assess nature-related risks within lending portfolios, project finance activities and investment decisions as global sustainability reporting expectations continue to converge. The ISSB has also introduced important governance provisions designed to strengthen disclosure quality. Companies wishing to claim compliance with the forthcoming Practice Statement will be required to apply all relevant provisions rather than selectively adopting individual elements. Organisations must also demonstrate compliance with both IFRS S1 and IFRS S2, reinforcing the interconnected nature of sustainability-related financial reporting. The Board’s approach seeks to improve consistency while reducing fragmentation across voluntary reporting initiatives that have emerged over the past decade. For corporate boards, the implications extend beyond sustainability departments.
Nature-related information will increasingly require integration into enterprise risk management, corporate strategy, internal control systems, audit processes and investor communications. Responsibility for biodiversity and ecosystem-related disclosures is therefore expected to become a governance issue involving finance executives, audit committees and company directors alongside sustainability professionals. The ISSB has further aligned its treatment of nature-related risks with the reporting architecture already established under IFRS S2 for climate disclosures. The Practice Statement introduces concepts including physical risks and transition risks associated with nature, allowing organisations to extend existing climate risk assessment frameworks into broader environmental risk management processes.
This alignment may reduce implementation complexity for companies that have already invested in climate-related reporting capabilities. By adopting similar governance structures, risk assessment methodologies and disclosure processes, organisations can build upon existing reporting systems rather than establishing entirely separate frameworks for biodiversity and natural capital. Another notable refinement concerns terminology. The ISSB has replaced references to “environmental assets” with the broader concept of “environmental resources,” reflecting recognition that companies depend upon ecosystems and natural processes extending beyond conventional accounting definitions of assets.
The revised language better captures dependencies on biodiversity, freshwater systems, soils, forests, marine ecosystems and other forms of natural capital that underpin economic activity but may not appear directly on corporate balance sheets. According to global organisations including the World Economic Forum, more than half of global economic output is moderately or highly dependent on nature and ecosystem services, highlighting the financial significance of biodiversity and environmental resilience for businesses and investors alike.
For African businesses, particularly those operating in agriculture, extractive industries, infrastructure, tourism and manufacturing, the evolving disclosure landscape presents both challenges and opportunities. Companies capable of demonstrating effective management of nature-related risks may strengthen investor confidence, improve access to sustainable finance and align more closely with emerging global capital market expectations. Conversely, organisations delaying investment in governance systems, environmental data and disclosure capabilities may encounter increasing scrutiny from financiers, customers and regulators as international reporting standards continue to mature.
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The ISSB expects to publish the exposure draft of the IFRS Practice Statement in October 2026, initiating a period of public consultation before finalisation. Although the guidance will not automatically become mandatory, jurisdictions may choose to incorporate it into national reporting requirements, while investors are likely to adopt it as a benchmark for assessing nature-related corporate disclosures.For businesses across Africa, the direction of travel is becoming increasingly clear.
Nature reporting is evolving from voluntary sustainability communication towards an integral component of financial disclosure, governance and investment decision-making. Organisations that begin strengthening their governance structures, data systems and reporting capabilities ahead of formal implementation are likely to be better positioned as global sustainability reporting continues to converge around internationally recognised standards.
