ISSB to prompt firms to consider climate-nature nexus through existing standards

ISSB’s Sue Lloyd says the standard setter aims to publish guidance this year on how applying its climate standard should result in 'thinking about nature-related things'.

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The International Sustainability Standards Board (ISSB) is aiming to publish educational materials by the end of this year to explain how applying its S2 climate standard will also address nature loss, its vice-chair Sue Lloyd told an event last week.

At the start of September, the ISSB closed a consultation that sought feedback on whether it should pursue research projects on: biodiversity, ecosystems and ecosystem services (BEES); human rights; human capital management and integration in reporting.

Responses from a range of institutions – including the UK’s FCA, ESMA, GFANZ, the Responsible Investment Association Australasia, Swiss Re and Sustainalytics – pushed for prioritising nature. Most stressed the importance of leveraging and aligning with the Taskforce for Nature-Related Financial Disclosures (TNFD).

The ISSB and biodiversity was a big topic at New York Climate Week, amid the launch of the final TNFD recommendations. Mary Schapiro, head of public policy at Bloomberg, called on the ISSB to quickly progress with a “common sustainability disclosure framework that integrates the work of the TNFD with the climate-related disclosure standards”.

The ISSB’s Lloyd also weighed in on the topic in a panel discussion, saying market participants do not have to wait until a decision is made on potential standards for biodiversity.

“While there is a lot of discussion on what we are planning to work on next, which is a fair question […] when we look at climate, we already see this nexus with nature being a very important thing, even in the context of what we’ve already published,” she told an event organised by KPMG.

She added that the ISSB hopes to complete a series of illustrative examples and educational materials by the end of the year that demonstrate how a “good application” of its S2 climate standard “should result in you thinking about nature-related things”.

The S2 standard sets out the requirements for identifying, measuring and disclosing information about climate-related risks and opportunities.

“We are all really intending to prompt this – look at the two things combined, even before we get on to [standard] three or four, whatever they might be.”

Lloyd added that the ISSB is looking to the TNFD for “inspiration for our examples”.

Regarding the consultation on the ISSB’s next project, she said no official analysis has yet been produced of the more than 400 responses.

“What I do know is that there is quite a lot of support for that [BEES] project based on the letters I’ve read and what I understand of the feedback so far,” she said. “And the other thing I would say is that there’s a lot of people saying ‘please look to the TNFD for inspiration’.”

As a formal next step, Lloyd said she expects that from November the ISSB will start to bring to its board a structured analysis of the feedback, with the aim of publishing a new work plan on next steps in the first half of 2024.

When the TNFD launched its long-awaited final recommendations, it emphasised they are “consistent with the global sustainability standards” of the ISSB, GRI and European Sustainability Reporting Standards (ESRS).

At the launch, Tony Goldner, the TNFD’s executive director, thanked the ISSB and GRI for being knowledge partners since its inception. “We look forward to doing what we can now to support their efforts to draw on our recommendations as they embark on developing new and updating existing nature-related disclosure standards.”

In its response to the launch, the ISSB said it will look to the TNFD recommendations – where it relates to meeting the information needs of investors – in its future work.