By choosing to develop non-mandatory nature-related reporting  rather than mandatory regulation, did the ISSB strategically give companies time to adapt, or did it postpone essential action in the face of an ecological emergency? This core question divides the ESG world and frames the debate throughout this article.

In April 2026, the global sustainability reporting landscape reached a pivotal moment. The International Sustainability Standards Board (ISSB), recognized for establishing consistent global sustainability disclosures, announced it would not develop a standalone standard for nature-related reporting. While material nature-related disclosures are not optional and already covered under IFRS S1,   ISSB also released IFRS Practice Statement, a guidance document on how to provide such disclosures.  In short, the nature-related disclosures may seem non-mandatory by design in terms of asserting compliance with IFRS standards, it can become mandatory by jurisdictions that choose to apply it as a material topic.  

The response however was polarizing.

Supporters called the decision pragmatic, given that companies are still working on existing climate and sustainability standards. Critics viewed it as a missed opportunity to address biodiversity loss with similar urgency as climate risk.

The debate highlights a broader question for ESG: should standard setters prioritize implementation of readiness, or accelerate disclosure requirements to address escalating environmental challenges?

What the ISSB Actually Decided

The board confirmed it would not create a standalone nature standard or amend existing IFRS S1 or S2 requirements to formally include biodiversity and ecosystem disclosures. Instead, it will issue an IFRS Practice Statement to support companies that wish to report on nature-related issues alongside current standards.

An exposure draft is expected in October 2026, opening the proposal to public consultation.

ESG Today reported that the board aimed to maintain momentum on existing standards rather than diminish nature-related issues. Legal analysis indicated that the new practice statement supplements, rather than adds to, the obligations under IFRS S1 and S2.

The ISSB itself clarified that the move was “not indicative of the importance that the ISSB regards nature topics,” but rather designed to prevent disruption while organizations continue implementing current standards.

In other words, the board’s message was clear: nature matters, but timing matters too.

This ongoing debate signals a critical juncture for ESG, setting the stage for further institutional reactions.

Why the TNFD Is Stepping Back

The ISSB’s announcement prompted another significant development.

The Taskforce on Nature-related Financial Disclosures (TNFD), which released its final recommendations in September 2023, announced that it would pause new technical guidance work and instead align its efforts with the ISSB’s program.

This represented a significant institutional shift.

As reported by ESG Today, more than 730 companies and financial institutions — representing over USD 9 trillion in market capitalization and USD 22 trillion in assets under management — have committed to adopting or exploring the TNFD framework.

Rather than continuing as a parallel standard-setting body, the TNFD is now consolidating its activities. Some view the TNFD's alignment as a sign of maturity that reduces reporting fragmentation. Others worry it may slow progress on biodiversity disclosure now that there is momentum. As nature-related risks climb the corporate agenda, maintaining momentum may prove just as important as achieving alignment.

Why Critics Say Guidance Is Not Enough

The main criticism centers on enforceability.

More than 200 sustainability leaders, scientists, and financial institutions signed a public letter urging the ISSB to develop a full standalone nature standard — often referred to as an “ISSB S3.” The letter, published through the Nature Positive Initiative, argues that voluntary guidance cannot deliver the consistency, comparability, and accountability that markets increasingly require.

The urgency of their position is difficult to dismiss.

The World Economic Forum Global Risks Report 2026 ranked biodiversity loss and ecosystem collapse among the world’s top three global risks. Research cited in the Nature Positive Initiative letter, drawing from Oxford University and TNFD work, identified approximately 600 examples of financial materiality linked to nature loss, while estimates suggest biodiversity degradation could generate economic losses reaching USD 2.7 trillion annually.

Critics argue that these figures show that biodiversity is fundamentally different. They argue that climate reporting is increasingly incomplete without nature reporting; ongoing ecosystem destruction could still undermine climate resilience, food systems, and stability, even if climate targets are met. This raises a broader question of whether climate progress alone can deliver long-term resilience once food systems and economic stability are also at stake.

Reports from the IFRS Sustainability Standards Advisory Forum indicate that most participating regulators supported exploring a dedicated nature standard, reinforcing that this debate extends beyond advocacy circles.

Why Supporters Defend the ISSB’s Approach

However, ISSB supporters raise a dilemma. Many organizations are still adapting to IFRS S1 and S2, building governance, identifying risks, and establishing data processes. Adding a mandatory biodiversity standard now could overburden teams, create compliance bottlenecks, and weaken disclosure quality.

From this perspective, the ISSB’s decision reflects a focus on sequencing rather than hesitation.

A practice statement allows companies to experiment, build internal capabilities, and assess material nature-related risks before formal obligations are introduced.

This argument is especially relevant outside of Europe.

As highlighted in BC ESG’s analysis of biodiversity disclosure readiness, the European

Union has already moved ahead through the Corporate Sustainability Reporting Directive (CSRD), which incorporates Supporters say requiring universal biodiversity reporting too soon risks resistance and uneven adoption, undermining ISSB’s goal of global consistency the ISSB aims to achieve globally.

In this view, voluntary guidance serves as a bridge rather than a final goal.

Why This Debate Matters Beyond Europe

The biodiversity debate is often seen as a European regulatory issue, but its implications are global.

Nature-related risks are especially acute in Southeast Asia, Latin America, and Pacific economies, which combine high biodiversity with significant exposure to land-use, agriculture, forestry, and extractive industries.

For financial institutions in Asia-Pacific, biodiversity is increasingly a portfolio issue. Agricultural supply chains, mining, forestry, fisheries, and coastal infrastructure all face risks tied to biodiversity and ecosystem degradation. carry exposure to ecological degradation.

These are not hypothetical ESG scenarios; they are real credit and investment risks.

Broader ESG outlooks, including Latham & Watkins’ 2026 ESG analysis, indicate that biodiversity and nature-related regulations, are becoming increasingly embedded in international sustainability and trade frameworks.

Brazil’s COP30 summit in Belém is expected to further elevate nature finance and biodiversity reporting on the global policy agenda.

The Real Risk May Be Waiting

The ISSB’s decision has created a unique moment in ESG reporting.

There is now a period in which biodiversity disclosure remains largely voluntary globally, but is increasingly expected by investors, regulators, and financial markets.

For forward-looking companies, this presents an opportunity.

October 2026’s exposure draft is likely to be the next major turning point. Organizations that engage early — testing disclosures, participating in consultation processes, and building nature-related reporting capabilities — may help shape the frameworks that ultimately govern them.

Those who wait face a different possibility: adapting only once expectations harden and compliance becomes unavoidable.

This debate about nature reporting is fundamentally about how—and by whom—the future of ESG disclosure will be shaped. The core argument is not just about technical standards, but about which approach will most effectively drive urgent and meaningful action.

It is about who shapes the future of ESG disclosure.

The question is no longer whether nature will enter mainstream reporting, but whether companies will act now to shape the future of ESG or let that future be shaped without their voice. The closing window for proactive involvement makes clear: in defining tomorrow’s rules, today’s action—or inaction—will be decisive.