What You Should Know About ISSB’s Practice Statement on Nature‑Related Disclosures

In practice, these reports are widely used by investors, lenders, customers, insurers, and business partners to evaluate how companies identify and manage risks that fall outside traditional financial statements — particularly environmental, operational, and supply‑chain risks.

 “Nature‑related disclosures” may soon join climate disclosures as a distinct category within sustainability reporting. On April 22, the International Sustainability Standards Board (ISSB) voted to develop nature‑related disclosure guidance as a non-mandatory IFRS Practice Statement rather than a binding standard.

The ISSB’s decision reduces immediate compliance pressure, but it does not eliminate the practical relevance of nature‑related risks for companies that already prepare sustainability reports or operate across jurisdictions with differing expectations. 

Below, we outline differences between nature-related and climate-related disclosures, why they exist, and how they fit into a highly fragmented sustainability reporting landscape. 

Nature‑Related Disclosures Compared to Climate Reporting

Most American companies with sustainability reporting experience are already familiar with climate disclosures that measure greenhouse gas emissions, assess climate‑related financial risks, and report them in standardized formats. Climate disclosures largely revolve around a single variable: greenhouse gases, measured in a universal unit (tons of CO₂‑equivalent), regardless of where emissions occur.

Nature‑related disclosures are fundamentally different. They focus on how companies depend on, and affect, natural systems beyond carbon, including water availability, biodiversity, soil quality, land use, fisheries, and ecosystem services such as flood protection and pollination. These risks are often inherently local. A facility drawing cooling water from a stressed aquifer in the Southwest presents different operational and regulatory risks than one located near a freshwater lake or coastal ecosystem.

The most widely referenced methodology for evaluating nature-related risks is the Taskforce on Nature-related Financial Disclosures (TNFD)’s LEAP approach (Locate, Evaluate, Assess, Prepare), which calls for companies to:

• Identify where operations and supply chains interact with the natural environment.

• Evaluate dependencies on local ecosystem services.

• Assess how changes to those systems could create financial risk.

• Prepare disclosures accordingly.

For companies with geographically diverse operations, this can be significantly more complex than assembling a greenhouse‑gas inventory.

How We Got Here

The ISSB was created to build a worldwide baseline for sustainability disclosure. Its first two standards are IFRS S1 (all material sustainability-related risks) and IFRS S2 (climate), which have been adopted or endorsed in more than 30 jurisdictions, though not the United States.

Separately, the TNFD developed a voluntary framework for reporting on biodiversity loss, water stress, pollution, and ecosystem dependencies. By late 2025, more than 700 organizations worldwide had indicated alignment with TNFD’s recommendations. Beginning in 2025, the ISSB began to fold TNFD’s work into its own standard-setting process, raising expectations that a binding nature standard would eventually accompany S1 and S2. 

The April decision signals that ISSB is not yet ready to mandate that step.

Why Nature Comes Up in US Sustainability Reporting — Even Without a Mandate

For many US companies, skepticism about nature‑related disclosure is reasonable. The scope is broad, the data is difficult to assemble, and public disclosure can create reputational or litigation risk if information is incomplete, poorly contextualized, or later challenged. In many cases, the business case for not making expansive new disclosures is hard to ignore.

At the same time, nature‑related issues increasingly surface in contexts where companies have limited ability to opt out. Investor diligence; lender and insurer questionnaires; supply‑chain contracting; environmental, social, and governance (ESG) ratings; and foreign reporting regimes all increasingly reference biodiversity, water stress, and land‑use impacts — often using TNFD‑aligned concepts. For companies already producing sustainability reports, the question is often not whether to engage with nature‑related issues, but how to scope them appropriately.

Macro‑level economic data helps explain why consideration of nature-related risks are gaining traction. The World Economic Forum estimates that over $44 trillion in annual economic output— more than half of global GDP — is moderately or highly dependent on nature, and a 2025 Ceres report calculated that nature loss could cost eight major sectors up to $430 billion per year. For companies in sectors such as energy, agriculture, infrastructure, or manufacturing, disruptions to those systems can translate into operational delays, cost increases, or permitting complications rather than abstract reputational concerns.

Compliance in a Fragmented Landscape

The real challenge for US‑based multinationals is not the ISSB Practice Statement itself but the fragmented regulatory and commercial landscape that surrounds it. A company headquartered in the United States may nonetheless face biodiversity or nature‑related disclosure requirements through foreign stock‑exchange listings, supply‑chain obligations imposed by counterparties, or European or Asian subsidiaries subject to the following requirements:

• In the European Union, companies subject to the Corporate Sustainability Reporting Directive must report on biodiversity under ESRS E4 where the topic is material. (See here for more.)

• In the United Kingdom, the Financial Conduct Authority is consulting on requiring listed companies to report under UK SRS, with climate disclosures mandatory from January 2027 and broader sustainability reporting on a comply‑or‑explain basis. (See here for more.)

• In Japan, ISSB‑aligned sustainability disclosures for prime market companies will be mandatory starting fiscal year 2027. 

While nature‑specific disclosure mandates are not imminent in the United States, the absence of a single domestic requirement offers limited comfort to companies with international exposure.

As ISSB Chair Emmanuel Faber noted in connection with the April decision, IFRS S1 already requires companies reporting under it to disclose all material sustainability‑related risks. For companies that rely heavily on water, land, agricultural inputs, or proximity to sensitive ecosystems, nature‑related factors may fall into that category even without a standalone standard.

The Broader Standards Ecosystem

Even where formal regulation is absent, nature‑related questions increasingly arise through ESG assessments, CDP questionnaires, sustainability‑linked loan covenants, and investor requests that reference biodiversity or water‑risk frameworks. CDP’s 2026 disclosure cycle expands coverage to ocean-related risks. The International Organization for Standardization (ISO) has also published ISO 17298:2025, addressing the integration of biodiversity considerations into organizational strategy.

Meanwhile, the legal profession itself is gearing up. The International Bar Association’s (IBA) Nature-Intelligent Legal Services seriesprovides a methodology for law firms and in‑house teams to assess client nature‑risk exposure and integrate nature considerations into legal services. The IBA’s February Business Case Guide summarizes market and legal developments that have increased attention to biodiversity‑related risks in multiple jurisdictions.

These developments do not compel public disclosure in every case, but they do create pressure points where companies may be asked to explain how they identify and manage nature‑related risks internally.

What This Means in Practice

ISSB’s decision to proceed with voluntary guidance reduces near‑term compliance risk and avoids imposing a one‑size‑fits‑all framework on highly localized issues. It also preserves flexibility for companies that conclude the costs of disclosure outweigh the benefits.

At the same time, for companies already engaged in sustainability reporting or operating across borders, nature‑related considerations are increasingly difficult to ignore altogether. Some organizations may choose to conduct limited internal assessments — such as mapping water dependencies or identifying operations near sensitive ecosystems — not for immediate public disclosure, but to ensure they can respond to investor, contractual, or regulatory inquiries if they arise.

The key takeaway is not that companies should disclose more, but that they should understand where nature‑related issues intersect with business operations and forecasting, existing reporting, risk management, and compliance obligations. Treating those issues as purely theoretical may leave companies unprepared when questions surface in less controllable contexts.

Members of the firm’s Environmental, Energy & Cleantech, and Environmental, Social & Governance teams regularly monitor international disclosure frameworks and advise clients on navigating evolving sustainability standards while balancing legal risk, cost, and operational realities.