The International Sustainability Standards Board (ISSB) has clarified how companies will implement nature-related disclosures under International Financial Reporting Standards S1 (IFRS S1), signalling that the Taskforce for Nature-related Financial Disclosures (TNFD) aligned metrics will form the practical backbone of reporting ahead of an expected October 2026 exposure draft.

Following its 24–25 June meeting, the Board published preliminary decisions that move its nature agenda from high-level direction to technical design. The focus is now on how disclosures should be structured, measured and applied in practice, rather than whether nature falls within scope.

From scope to implementation

The ISSB confirmed in April 2026 that nature-related disclosures would be delivered through a supplementary IFRS Practice Statement, not an entirely new standard. The June decisions make clear how that guidance will work operationally.

Last week’s meeting settled their position. Nature-related disclosures are required under IFRS S1, and the Practice Statement will be designed to show companies how to deliver them in a consistent and decision-useful way. As ISSB Chair Emmanuel Faber has stated, “providing material nature-related disclosures is not optional; IFRS S1 already requires that.”

This marks a shift for preparers. The question is no longer whether to address nature, but how quickly existing processes can be adapted to meet emerging expectations.

Reframing nature

A key decision is the move from “environmental assets” to “environmental resources”. While subtle, this signals a deliberate shift away from a balance sheet framing towards a broader view of dependencies and impacts.

The ISSB has also defined “nature-related transition risks” and “physical risks”, mirroring the structure used in IFRS S2 for climate. This consistency matters. It indicates that companies can extend existing climate risk frameworks to nature, rather than building parallel systems.

Embedding TNFD

The most consequential decision relates to metrics. Companies will be permitted to use TNFD-aligned metrics, which the ISSB has declared as fully in line with IFRS S1 objectives.

This formalises what many companies have already begun doing voluntarily. TNFD is not being adopted wholesale, but it is being positioned as the primary reference point within an IFRS-led framework.

For preparers, this reduces uncertainty. Investments made in TNFD alignment since 2023 are unlikely to be stranded and may form the basis of future IFRS-compliant disclosures.

Initial adoption

The ISSB has introduced several measures to ease initial adoption. The Practice Statement will be available for application as soon as it is issued for companies already applying IFRS S1 and S2, and no comparative information will be required in the first year, with disclosures applied prospectively from the date of initial use.

At the same time, the ISSB has taken a stricter stance on compliance, making clear that companies will only be able to state compliance if they meet all requirements of both the Practice Statement and the IFRS Sustainability Disclosure Standards, with no allowance for partial application.

A Practice Statement with real weight

Although the Practice Statement will not introduce new requirements, its practical effect is significant. Once embedded in reporting processes and investor expectations, it is likely to function as a de facto standard.

For companies, this creates a familiar dynamic. Guidance initially framed as optional can quickly become the baseline against which disclosures are assessed, particularly where investors and auditors converge around a common interpretation.

What happens next

The ISSB will next decide whether to ballot an exposure draft of the Practice Statement, with publication targeted for October 2026. That timeline suggests that market expectations will form quickly, particularly given the alignment with wider international sustainability milestones.

For preparers, the implication is immediate. They must treat TNFD alignment as the working backbone of IFRS S1 nature disclosures, and use 2026 to build auditable metrics, controls and governance. By the time the Practice Statement is exposed, investor expectations are likely to already reflect this model.

This latest development comes as ISSB continues to update and consolidate it’s standards with international best practices.

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