The effort to craft standards for nature-related financial disclosures in the global capital markets is taking a step forward, with international accounting standards setters and the Taskforce on Nature-related Financial Disclosures (TNFD) formalizing their cooperation.
The IFRS Foundation and TNFD have signed a memorandum of understanding that signals the possible integration of the TNFD’s recommendations for disclosing nature-related financial risks into the global disclosure standards that have been developed by the International Sustainability Standards Board (ISSB).
The organizations said that the agreement, signed earlier this week, will deepen their collaboration “as the ISSB considers the TNFD recommendations in its research into the needs of global capital markets for information about nature-related risks and opportunities.”
“Our collaboration with the TNFD is a clear signal to the market that we are committed to reducing fragmentation in sustainability disclosure while meeting the need for relevant and high-quality information for capital markets,” said Sue Lloyd, ISSB vice-chair, in a release.
“Strengthening the global baseline of sustainability disclosures with nature-related disclosures to meet investors’ information needs… is a core focus of our work plan, and this ongoing collaboration and sharing of research and expertise will propel our work forward more effectively,” she added.
Under the MoU, the ISSB and the TNFD will share research, knowledge and technical expertise, they said.
“Nature is essential to our economies and our future. Our collaboration with the ISSB is a major step toward making nature visible in businesses reporting and how capital is allocated,” said Razan Al-Mubarak, co-chair of the TNFD.
“Climate-related standards have already moved markets and we are pleased to continue to support ISSB efforts that bring the rest of nature into global reporting practice. Stronger standards mean stronger businesses — and a healthier, more resilient planet for all of us,” she added.
“Transparency and accountability are a key means of enabling more stable, resilient and efficient capital markets, and this collaboration will advance the ISSB’s ongoing work to reduce the complexity of the sustainability disclosure landscape, while building on established expertise and practice,” said Erkki Liikanen, chair of the IFRS Foundation trustees.