By Julie McCarthy, CEO, NatureFinance
On Earth day, the world’s foremost financial reporting body will decide whether nature-related risks warrant a real standard. Staff say no, the evidence says otherwise.
Something remarkable happened on the way to global financial reform. In November 2025, the International Sustainability Standards Board (ISSB) formally announced it would develop mandatory disclosure requirements for nature-related financial risks. The Taskforce on Nature-related Financial Disclosures (TNFD), a taskforce that had spent four years building the voluntary framework this standard would draw on, stood down its own work to clear the road. Then, with barely three weeks’ notice before the crucial vote, ISSB staff reversed course. The recommendation now before the board on April 22 is not a standard. It is a “practice statement” — non-mandatory guidance with no regulatory authority that no company is required to follow. It is a document produced to demonstrate that the ISSB took notice of a problem before declining to do anything about it.
The ISSB’s mandate, as written in its founding documents, is to give investors material information about companies’ sustainability risks. An estimated $44 trillion of annual economic output is directly dependent on nature. Declining to require disclosure of risks touching more than half of global GDP is not a procedural judgment. It is a determination about materiality that the evidence flatly contradicts.
The evidence runs sharply in the other direction. In 2022, 69% of listed companies submitting water-related data to the environmental disclosure platform CDP reported nature-related risk exposure of up to $225 billion, based on water dependency alone. Water availability is a function of watershed health and soil ecosystems. It is not an abstraction; it is already a balance sheet item, showing up in capital expenditures, facility closures, and insurance costs for companies from semiconductors to food and beverage. This is before accounting for pollinator collapse, which threatens agricultural production worth trillions annually, or deforestation-driven supply chain disruption, which the EU’s new deforestation regulation will transform into a formal legal liability by year-end.
The science is unambiguous: natural carbon sinks currently absorb roughly a third of global emissions and all credible pathways to 1.5C warming assume that absorption continues. Those sinks, including forests, wetlands, and ocean systems, are collapsing. The ISSB knows this. And yet under its existing climate standard, companies report their climate risks against an implicit assumption that natural carbon sinks will continue to buffer and absorb the effects of warming. Those sinks are collapsing under pressure from the very industries that the standard is supposed to govern.
The ISSB is not simply declining to address nature. It is actively maintaining a disclosure framework that instructs companies to report climate risk against a baseline that the board’s own scientific advisors know to be false. A practice statement on nature does nothing to correct this. It leaves that climate standard structurally intact and leaves investors receiving climate risk assessments built on a fiction the standard-setter has been briefed on and chosen to ignore.
The staff’s stated rationale for a practice statement over a standard is disruption risk — that adding a binding nature requirement could complicate adoption of its two existing standards in jurisdictions still implementing them. This concern deserves to be taken seriously, and then rejected. The disruption argument was equally available in November 2025, when the ISSB board unanimously committed to developing nature disclosure requirements. It was available when the TNFD wound down its own technical work in direct response to that commitment, leaving 750 organizations and $22 trillion in assets under management with no standard-setter actively developing the framework they had organized around.
Choosing to retreat now does not reduce disruption. It relocates it, onto the investors who restructured around the ISSB’s commitment, and onto the market, which will now watch the EU’s mandatory nature standard, the ISO biodiversity framework, and a growing patchwork of jurisdictional requirements fill the gap that a unified ISSB standard would have closed.
A practice statement does not prevent fragmentation. It guarantees it. The ISSB was created specifically to solve the problem of companies disclosing incomparable, inconsistent sustainability information across frameworks. Issuing a non-mandatory document on nature and then watching a growing number of jurisdictions develop their own mandatory nature requirements is not caution. It is the kind of coordination failure the ISSB was built to prevent.
The TNFD’s own research, drawing on 600 pieces of evidence from 360 sources, reached a pointed conclusion: nature-related risks are not consistently disclosed as financially material in corporate reports. The reason is not that the risks are not material. It is that no standard requires companies to look for them. A practice statement asks companies, politely, to consider looking. A standard requires them to report what they find. The decade-long history of voluntary sustainability disclosure makes one thing crystal clear: companies do not disclose what they are not required to disclose.
The insurance industry has already absorbed this lesson actuarially. Entire asset classes are becoming harder to insure as climate change and ecosystem degradation accelerates floods, wildfires, and agricultural failure. When insurers withdraw, they are not making an ESG statement, they are pricing a risk that corporate balance sheets have not yet been required to acknowledge. That gap between what the insurance market knows and what investor disclosures show is precisely the information failure the ISSB was created to correct.
The board meets on Earth Day. Its staff are recommending that in response to a systemic financial risk touching $44 trillion of economic output, the board should produce a document that companies are not required to use. Rejecting that recommendation and committing to a standalone nature standard, phased in with the same implementation runway the ISSB gave for its climate and sustainability standards, is not an act of ambition. It is the minimum the ISSB’s mandate requires.
