An international standard-setting body on disclosures has been urged by its staff to ramp up efforts in researching biodiversity, as companies are showing an increasing interest in improving assessments of nature-related risks and opportunities.
The recommendation was included in a paper published by the International Sustainability Standards Board (ISSB) ahead of its upcoming meeting on Apr. 24, which will discuss the research for the next two years that could inform its future standards for disclosures for investors.
The ISSB is part of the International Financial Reporting Standards Foundation (IFRS), an independent organisation that produces accounting rules used in more than 100 countries.
In September, it launched consultations among companies and financial institutions, seeking views on its priorities, including future research projects.
Based on this feedback, the staff recommended the ISSB focus on two main areas – human capital, and biodiversity, ecosystems, and ecosystem services.
“Feedback from respondents indicates that there is significant and growing interest among investors for improved disclosure about risks and opportunities related to biodiversity, ecosystems, and ecosystem services that could reasonably be expected to affect an entity’s prospects,” said the staff paper.
“Although entities are increasingly disclosing information to investors about their [biodiversity-related] risks and opportunities, the practice is relatively immature and, in some areas, evolving slowly due to the challenges inherent in the subject matter.”
ENSURING COMPARABILITY
The paper also emphasised the need to enhance interoperability with other standards, such as the Global Reporting Initiative (GRI), the Taskforce on Nature-related Financial Disclosures (TNFD), and the European Sustainability Reporting Standards (ESRS).
TNFD and GRI announced last week they are strengthening their collaboration, and will publish a document mapping out their interoperability before the end of June with details on their alignment.
“By seeking opportunities to optimise interoperability – and, in so doing, reduce duplicative effort by preparers and increase the signal-to-noise ratio for investors – the staff thinks the ISSB could achieve more effective outcomes and, at the same time, foster more constructive stakeholder engagement,” the paper said.
Alignment of biodiversity disclosures is regarded as key to enhancing transparency, as it ensures comparability of companies’ impacts on nature.
While different frameworks have emerged recently to steer the corporate sector through assessing and disclosing biodiversity-related risks and dependencies, experts have increasingly pointed out the disparities between existing measurement approaches and requirements.
Earlier this month, a group of researchers at Sweden’s University of Gothenburg called for a global framework that integrates and aligns existing methodologies to be established.
By Sergio Colombo – sergio@carbon-pulse.com
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