A new agreement between the International Financial Reporting Standards (IFRS) Foundation and the Taskforce on Nature-related Financial Disclosures (TNFD) aims to advance the groups’ collaboration to include impacts on nature in a set of globally standardized sustainability financial disclosures aligned with The International Sustainability Standards Board (ISSB).
The agreement is based on the reality that nature is the source of all business. Every business depends on natural resources, whether they rely on feedstock for products or fuel or they capitalize on natural ecosystems, as in tourism. When nature is lost to overharvesting or climate change risks such as droughts and high temperatures, supply chains break down, costs rise, insurance becomes prohibitive.
Protecting nature, on the other hand, creates new opportunities for innovative, sustainable and socially just businesses.
The goal of the IFRS and TNFD agreement is to consider TNFD’s recommendations about accounting for a business’s impact on nature in its standard financial disclosures.
“Nature is essential to our economies and our future. Our collaboration with the ISSB is a major step toward making nature visible in businesses reporting and how capital is allocated,” said Razan Al-Mubarak, Co-Chair of the TNFD, President of the IUCN. “Climate-related standards have already moved markets, and we are pleased to continue to support ISSB efforts that bring the rest of nature into global reporting practice. Stronger standards mean stronger businesses—and a healthier, more resilient planet for all of us.”
The IFRS introduced the accounting standards that have become the de facto global language of financial statements. These standards are trusted by investors worldwide and required for use by more than 140 jurisdictions. In 2021, the IFRS introduced the International Sustainability Standards Board (ISSB) to establish a global set of standards for sustainability financial reporting.
Since then, ISSB has been a TNFD Knowledge Partner. TNFD has relied on ISSB guidance for the recommendations it published in 2023. More recently, the TNFD has been supporting the ISSB’s Biodiversity, Ecosystems and Ecosystem Services (BEES) research project that was presented to ISSB members in February.
Under their new agreement ISSB will consider the relevance of the TNFD recommendations in meeting the needs of global capital markets. ISSB and TNFD will share research, knowledge and technical expertise to inform both the ISSB’s BEES initiative and nature-related aspects of its SASB standards enhancement work. Both organisations will further explore joint market engagement and capacity-building initiatives, including with other key partner organizations.
“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,” said Sue Lloyd, ISSB Vice-Chair. “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.”
