Ignoring nature reporting will soon be a compliance risk for companies

The management and disclosure of nature-related risks and opportunities by organisations have been driven by a recognition of the increasing need to consider nature in business and financial decisions.

Organisations, as members of society, have impacts and dependencies on nature, which require them to aim to reduce the adverse effects on nature.

For example, reducing and preventing waste, including pollution from production activities such as manufacturing. It could also involve efforts that have a positive impact on nature.

For example, the adoption of sustainable business practices and business model transformation that conserve, enhance and restore ecosystems.

In 2021, the Taskforce on Nature-related Financial Disclosures (TNFD) was established to develop the risk management and disclosure framework for organisations to report on nature-related risks and opportunities.

There are currently over 700 organisations globally that have voluntarily adopted the TNFD, with more organisations committing to do so.

The TNFD recommends that organisations use the LEAP (Locate, Evaluate, Assess, and Prepare) approach when assessing nature-related risks and opportunities.

It requires organisations to identify interference with nature, evaluate dependencies and impacts, assess material risks and opportunities, and prepare to respond and report.

Recently, the ISSB (International Sustainability Standards Board), the body responsible for issuing the global baseline sustainability disclosure standards, IFRS S1 and IFRS S2, announced its decision to move into a standard-setting process on nature-related risks and opportunities, leveraging the disclosure recommendations and guidelines of the TNFD, including aspects of the LEAP approach.

The announcement aligns with the ISSB mandate to meet investor demand for information on biodiversity, ecosystems, and ecosystem services research.

The ISSB has set an initial target to have a draft exposure of the standard, potentially IFRS S3, by late October 2026.

Therefore, the TNFD plans to complete all its technical work by the third quarter of 2026 and focus resources on supporting the ISSB’s work programme for the new sustainability disclosure standard.

This approach by the ISSB is a welcome move. Organisations planning to adopt the ISSB standards should proactively begin preparing for the management and disclosure of nature-related risks and opportunities.

Akinyemi Awodumila is a Partner at PwC Kenya. He is an author who writes and speaks widely on corporate reporting topics