IFRS And TNFD Partner To Boost Nature Disclosures

In a major move towards improving sustainability reporting and aligning global financial markets with nature-related risks, the IFRS Foundation and the Taskforce on Nature-related Financial Disclosures (TNFD) have made their collaboration official through a Memorandum of Understanding (MoU). This strategic alliance represents a new chapter in their continued work to incorporate nature-related considerations into financial disclosure standards, making the environmental aspect of sustainability more transparent and investor-friendly.

The International Sustainability Standards Board (ISSB), an entity of the IFRS Foundation, will now officially integrate the TNFD's suggestions into its standard-setting work. This entails alignment with the ISSB's Biodiversity, Ecosystems, and Ecosystem Services (BEES) research initiative, which is intended to provide capital markets with more detailed and comparable information regarding how companies affect and rely on nature. The consolidation is likely to improve the consistency and usefulness of disclosures on biodiversity, ecosystems, and other nature-related risks.

IFRS Foundation Trustees' Chair Erkki Liikanen highlighted the significance of the partnership, pointing out that it draws on decades of joint research and shared objectives. "We are pleased to be making our collaboration with TNFD formal so that the ISSB provides proper regard for TNFD's efforts in developing recommendations for nature-related disclosure," he said. "Transparency and accountability are a major way of facilitating more stable, resilient and effective capital markets… while drawing on established practice and expertise."

Since the TNFD's inception in 2021, the ISSB has served as an essential knowledge partner. Its previous work, such as the SASB sector classification framework, CDSB biodiversity reporting guidance, and IFRS S1, have strongly influenced TNFD's methodology. TNFD's September 2023 final recommendations and their latest contributions to the ISSB's BEES initiative in February 2025 also strengthened the foundation for this official collaboration.

ISSB Vice-Chair Sue Lloyd spoke similarly to Liikanen's words and the strategic value that comes with it of minimizing fragmentation in sustainability disclosure. "The fact that our work is part of a whole-of-market process, and an alignment with TNFD, means that we clearly are signaling that we are devoted to minimizing fragmentation in sustainability reporting while addressing demand for appropriate high-quality information about capital markets," she said. "Enhancing the global basis of sustainability disclosures with nature disclosures… is key to our work plan.

Under the MoU, the ISSB and TNFD committed to exchanging research and technical know-how and joint capacity-building with other stakeholders. The two organizations will collaborate in refining SASB standards, assisting with the evolution of the BEES initiative, and maintaining the due process of the IFRS Foundation, which includes public consultation, in any standard-setting. This institutional arrangement not only enriches the technical quality of the sustainability standards but also creates an integrated global landscape for nature-related reporting.

David Craig, TNFD Co-Chair, pointed to the historical parallel with the Task Force on Climate-related Financial Disclosures (TCFD), which provided the foundation for market-led climate reporting standards. "Similar to the TCFD before us, the TNFD was brought forward before having particular reporting standards in order to create market-based recommendations for useable by business and sensible corporate reporting practice regarding nature-related elements outside of GHG emissions," he clarified. Craig highlighted that better disclosure about nature-related risks will be key to the success of Target 15 of the Kunming-Montreal Global Biodiversity Framework, requiring large companies to disclose nature-related information on a mandatory basis.

Razan Al-Mubarak, Co-Chair TNFD and President International Union for Conservation of Nature (IUCN), highlighted the wider implications of this cooperation. "Nature is crucial to our economies and our future.". Our collaboration with the ISSB is an important step to bringing nature onto the balance sheet through businesses' reporting and capital allocation," she added. Al-Mubarak further added that the TNFD will keep working on preparer guidance, market consultation, and pilot testing, as well as on addressing issues related to data quality and access.

This official alignment of the ISSB and TNFD represents a historic shift towards incorporating biodiversity and ecosystem services into the mainstream of financial disclosures. It recognizes the increased need from international investors for better, more standard views of how nature-related topics can affect financial performance and system market risks. As both bodies continue to work together, the result is expected to be a strong, worldwide-accepted methodology that allows business and investors to account for nature as much as financial and climate risks.

Ultimately, this collaboration is a reflection of the increasing realization that higher sustainability standards equal more resilient businesses, healthier economies, and a better planet.