Nature reporting has just moved from a near-term mandatory standard into a slower, more flexible pathway. That does not mean nature risk has disappeared from ESG disclosure. It means companies now face a more difficult judgment: deciding when biodiversity, water, land use, pollution, and ecosystem dependencies are financially material enough to disclose under existing sustainability standards. In April 2026, the ISSB decided to propose an IFRS Practice Statement for nature-related disclosures instead of issuing a standalone mandatory nature standard. FTK’s Internal Data Hub captured the shift clearly: ISSB selected a Practice Statement approach, replacing the standalone standard route and signaling a softer path for biodiversity disclosure. The commercial message is clear: regulators may slow down, but investors, buyers, lenders, and supply chains will still ask for decision-useful ESG data.

The ISSB Has Slowed the Format, Not the Market Expectation

The ISSB’s decision means there is no immediate “IFRS S3” for nature. Instead, the Board agreed to propose requirements and guidance for nature-related disclosures through an IFRS Practice Statement, with an exposure draft expected for public comment in October 2026. The ISSB also confirmed that the Practice Statement would complement IFRS S1 and IFRS S2, rather than amend them. This matters because Practice Statements are not the same as mandatory IFRS Sustainability Disclosure Standards. Jurisdictions may decide whether to require them locally. For companies, this creates uneven pressure: some markets may keep nature reporting voluntary, while others may fold the guidance into listing rules, investor requirements, procurement standards, or sector-specific expectations. The risk is not only regulatory. The real risk is inconsistent disclosure readiness. Businesses that wait for a hard legal trigger may find that customers and investors move faster than standard-setters.

IFRS S1 Still Pulls Material Nature Risk Into Scope

The step-back should not be misread as an exemption. IFRS S1 already requires companies to disclose material sustainability-related risks and opportunities that could reasonably affect their prospects. The ISSB Chair has emphasized that material nature-related disclosure is not optional where it falls within IFRS S1; the Practice Statement is intended to guide companies on how to disclose it. This is the practical issue for boards and ESG teams. A manufacturer dependent on water-intensive processes, a food company exposed to agricultural inputs, a data center facing location-based water and energy constraints, or an industrial park managing land, wastewater, and tenant impacts may already have nature-related exposure. The absence of a standalone standard does not remove that exposure from enterprise risk. KPMG’s April 2026 analysis notes that the proposed Practice Statement is expected to build on TNFD concepts, including the LEAP approach, and cover themes such as land use, pollution, resource extraction, water, and biodiversity. It also states that companies already need to report material nature-related information under IFRS S1, while the new project is designed to help them do so more effectively.

The Business Impact Is Data Readiness, Not Report Design

For most companies, the gap is not a lack of ESG language. The gap is the absence of structured, location-specific, auditable data. Nature-related disclosure depends on information that many businesses do not yet collect consistently: site location, water withdrawal, discharge, waste streams, land use, supplier exposure, pollution incidents, resource dependency, and mitigation actions. This is where the ISSB decision creates a strategic window. Companies have more time before nature disclosure becomes widely mandatory, but not more time to keep ESG data fragmented. Once investors or buyers ask for nature-related evidence, companies cannot build credible disclosure from scattered Excel files and narrative statements alone. The companies most exposed are not only those with obvious biodiversity impact. Exporters, manufacturers, industrial operators, real estate owners, logistics firms, and supply chain companies can all face indirect nature risk through sourcing, permitting, water stress, local community impact, and customer due diligence.

What Companies Should Do Before the Rules Harden

For companies already reporting under IFRS S1 or preparing ISSB-aligned disclosure, the priority is to screen nature-related risks through financial materiality. This means identifying where nature dependencies or impacts could affect costs, revenue, asset value, permits, financing, or customer access. For companies under buyer or investor pressure, the priority is to prepare evidence before the request arrives. Nature-related data should be linked to operational sites, business units, suppliers, and responsible owners, not collected once a year as a reporting exercise. For companies in Vietnam, Singapore, and ASEAN supply chains, the priority is to treat nature as part of ESG data infrastructure. ISSB alignment, GRI disclosure, supply chain due diligence, and future nature reporting will all demand consistent data collection, validation, and workflow tracking.

The Strategic Conclusion: Nature Disclosure Is Becoming a System Requirement

The ISSB decision reduces the near-term compliance shock, but it does not reduce the business case for nature data. A softer standard-setting path may actually increase complexity because companies must respond to a mixed market: voluntary guidance at global level, possible mandatory adoption by jurisdictions, and rising investor and supply chain scrutiny. The winning companies will not wait for every disclosure line item to become compulsory. They will build the data foundation now, so nature, climate, waste, water, and emissions can be managed through one workflow rather than separate reporting projects. Nature reporting is not only about biodiversity. It is about whether a company can prove how environmental dependencies and impacts affect business resilience, market access, capital access, and long-term competitiveness.

Is your organization ready for the 2026 reporting shift? Our advisory team specializes in helping businesses transition from GRI to IFRS, build CBAM-ready reporting systems, and design multi-framework ESG strategies for exporters and listed companies in Vietnam. Get in touch to arrange a strategic ESG assessment today. #ESG #SustainableBusiness #ISSB #BusinessGrowth #GHGProtocol