The IFRS Foundation’s International Sustainability Standards Board (ISSB) announced plans to launch new projects researching corporate disclosure on risks and opportunities in key sustainability-related areas including biodiversity, ecosystems and ecosystem services, and human capital, with the initiative aimed at informing its work on future sustainability reporting standard setting.

According to ISSB Chair Emmanuel Faber, the new project follows market feedback which “indicated a significant and growing need among investors for improved disclosures” regarding nature and human capital “as a key source of value for companies.”

Faber added:

“Beyond climate, we are committed to building out the global baseline of sustainability-related financial disclosure to meet the needs of investors.”

The ISSB was launched in November 2021 at the COP26 climate conference, with the goal to develop IFRS Sustainability Disclosure Standards, driven by demand from investors, companies, governments and regulators to provide a global baseline of disclosure requirements enabling a consistent understanding of the effect of sustainability risks and opportunities on companies’ prospects.

The new project follows the launch last year of the inaugural general sustainability (IFRS S1) and climate (IFRS S2) reporting standards, which are expected to inform emerging disclosure requirement systems from many regulators globally, with a wide range of jurisdictions already announcing intentions to adopt the standards, including the UK, Canada, Brazil, Japan and South Korea, among others.

Following the release of the new standards, the ISSB launched a consultation on its priorities for its next two-year work plan. In a recent meeting, the board decided that it’s upcoming activities will prioritize activities including beginning new research and standard-setting projects, and supporting the implementation of IFRS S1 and IFRS S2, in addition to enhancing the industry-specific SASB standards, pursuing connectivity between the IFRS’ sustainability and financial disclosure standards and interoperability between its sustainability standards and others, and engaging with stakeholders.

In its statement announcing the new research projects, the ISSB said that its focus on nature and human capital was informed by its consultation, while market feedback also has led the board to not embark on projects related to risks and opportunities associated with human rights, beyond risks and opportunities relating to a company’s own workforce and workers in its value chain.

While the board noted that its general sustainability disclosure standard IFRS S1 already requires reporting on material information about all sustainability-related risks and opportunities, the new projects “will enable the ISSB to embark on its own standard-setting work in key areas needed to establish more specific disclosures to build out the global baseline of sustainability-related financial disclosures.”

Under the new project, the ISSB said that it will assess and define current nature and human capital disclosure limitations, identifying possible solutions and deciding if standard setting is required.

The ISSB added that its approach will consider how it might build from relevant pre-existing initiatives, including relevant aspects of the work of the Task Force on Nature-related Financial Disclosures (TNFD). The TNFD launched its own recommendations for nature-related risk management and disclosure last year, and the ISSB previously said that the TNFD recommendations will inform its future standard setting.

Following the ISSB announcement, David Craig, Co-Chair of the TNFD, said:

“We have been delighted to have had the ISSB alongside the TNFD as a knowledge partner for the past two years informing our work on a set of market-based recommendations.  We are now delighted to be able to support their translation of our recommendations into a set of specific IFRS reporting standards going beyond climate to incorporate the whole natural system upon which business and finance depend.”