Australian boards are still adjusting to mandatory climate-related financial reporting. Yet another disclosure topic is gathering momentum: nature. On 22 October 2026, the International Sustainability Standards Board (ISSB) published an Exposure Draft for IFRS Sustainability Disclosure Practice Statement 1, Nature-related Disclosures. Submissions close on 19 February 2027.
Does this mean Australian companies must now prepare biodiversity or nature reports? No. But the proposals warrant attention, particularly from directors, executives and company secretaries seeking to understand emerging business risks and where disclosure requirements might head next.
What is nature reporting – and why might it matter?
Nature reporting concerns how an organisation depends on and affects the natural environment, and how those interactions can generate financially relevant risks and opportunities. Nature includes land, water, oceans, air, biodiversity and ecosystems. Dependencies can include reliable water supplies, soil productivity, pollination and healthy coastal ecosystems; impacts can include habitat alteration, pollution or resource depletion.
The financial consequences may arise through physical disruption, changing regulation, litigation, financing conditions, reputational effects, supply chains or market demand. Importantly, a company need not have a large operational footprint to have significant nature-related exposures through customers, suppliers, investments or insured assets. The reporting lens is not simply whether a company is environmentally beneficial or harmful: it is whether nature-related matters could reasonably be expected to affect its prospects.
How did we get here?
In June 2023 the ISSB issued IFRS S1, General Requirements for Disclosure of Sustainability-related Financial Information, and IFRS S2, Climate-related Disclosures. IFRS S1 encompasses material sustainability-related risks and opportunities, including those relating to nature, for entities that apply it. Separately, in September 2023, the market-led Taskforce on Nature-related Financial Disclosures (TNFD) released recommendations organised around governance, strategy, risk and impact management, and metrics and targets.
The ISSB commenced research into biodiversity, ecosystems and ecosystem services in 2024, advanced the nature project to standard-setting in December 2025, and chose in 2026 to consult on a Practice Statement rather than immediately propose a separate IFRS Sustainability Disclosure Standard. Its October 2026 draft draws extensively on the TNFD framework. Nature reporting is therefore not new; what is new is the proposed ISSB mechanism designed to improve consistency and comparability for investors.
What is proposed?
The draft builds on IFRS S1 and IFRS S2 rather than creating an entirely separate disclosure architecture. Its proposed requirements address identifying nature-related risks and opportunities, the interconnections with climate, governance oversight, strategy and value chains, risk management, resilience and scenario analysis, and metrics and targets.
Several features deserve particular attention. Location matters: water stress or ecosystem degradation in one catchment can have different business consequences from conditions elsewhere. The draft also addresses interactions with Indigenous Peoples, Local Communities and affected stakeholders where relevant to financially material nature-related matters. It proposes information about how boards and management take these matters into account, and about the resilience of strategy and business models using nature-related scenario analysis proportionate to an entity’s circumstances.
On metrics, paragraph 30 proposes the amount and percentage of assets or business activities vulnerable to nature-related risks and aligned with nature-related opportunities, where information is material. It also permits consideration of applicable TNFD disclosure metrics. The draft does not mandate that every entity report every biodiversity metric. Proposed proportionality provisions include using reasonable and supportable information available without undue cost or effort for specified assessments; they are not a blanket exemption from reporting material risks.
What is the position in Australia?
Australia’s statutory sustainability reporting regime is currently climate-focused. Under Part 2M.3 of the Corporations Act 2001 (Cth), including section 292A, reporting entities within the applicable thresholds must prepare sustainability reports containing climate-related financial information in accordance with AASB S2, Climate-related Disclosures. Reporting commenced for Group 1 financial years beginning on or after 1 January 2025, Group 2 on or after 1 July 2026, and Group 3 on or after 1 July 2027. AASB S1, General Requirements for Disclosure of Sustainability-related Financial Information, remains voluntary in Australia.
Consequently, neither the ISSB Exposure Draft nor IFRS S1 automatically imposes mandatory nature reporting on Australian businesses. The draft is not a final ISSB pronouncement, and Australia has not announced a mandatory nature-reporting commencement timetable. Any Australian adoption, including whether voluntary or mandatory and which entities would be covered, would require further domestic decisions and potentially changes to legislation or reporting requirements. It would be premature to describe 2028, 2029 or any other year as an expected Australian commencement date.
Existing environmental and corporate law obligations, directors’ duties and disclosure requirements may nonetheless be relevant to particular nature-related risks today. Their application depends on the company, the facts and the applicable regulatory regime. Nature should not be treated as immaterial merely because a new stand-alone reporting requirement has not been enacted.
Different sectors, different exposures
Mining, agriculture, forestry, food production and property businesses can have substantial direct dependence on land, water and ecosystem condition, as well as direct impacts and local permitting or stakeholder considerations. Their assessments may require location-specific information, specialist ecological expertise and supply-chain analysis.
Financial institutions face a different challenge. Consider a large APRA-regulated general insurer that has recently published its first mandatory climate-related sustainability report and has modest direct greenhouse-gas emissions. Those emissions say little, by themselves, about its nature-related financial exposure. Underwriting portfolios may involve properties vulnerable to coastal ecosystem deterioration, businesses dependent on water availability, or agricultural risks associated with land degradation. Investment portfolios, counterparties and claims experience may also warrant review.
That does not establish that such exposures are material for every insurer. Determining materiality may require a staged analysis of geographic concentrations, classes of business, investment holdings, available risk data and the relationship between nature, climate and catastrophe modelling. The exercise could be relatively contained or substantially more complex depending on portfolio characteristics and data availability. Assertions that the additional cost will be “medium” or the assurance burden “low” are not reliable without an entity-specific assessment.
What should boards do now?
An immediate, organisation-wide nature-reporting implementation project would be disproportionate for many companies. A more defensible response is to incorporate an initial nature-risk discussion into established governance processes. Directors might ask management to identify potentially material nature-related dependencies and exposures; explain which business lines, locations, assets or value-chain relationships could be relevant; assess the adequacy and limitations of current information; and consider whether existing climate and enterprise risk processes can be used.
Where warranted, management could undertake a proportionate materiality or gap assessment, monitor the international consultation and Australian policy response, and identify whether investors, lenders, insurers or customers already expect nature-related information. Responsibility should sit within existing board and management governance structures, with committee oversight adjusted to the company’s circumstances rather than creating another standing committee by default.
The central question is not “When must we produce a nature report?” It is “Could our business depend on, affect, or be financially exposed to nature in ways that our existing governance and reporting do not adequately capture?”
Looking ahead
Consultation on the ISSB Exposure Draft remains open until 19 February 2027. The ISSB will then consider whether to finalise the proposed Practice Statement or issue nature-related requirements in another form. Whether Australia subsequently adopts them – and on what terms – remains undecided.
Nature reporting may eventually become a prominent part of the Australian corporate reporting landscape. For now, informed awareness and proportionate early assessment are preferable to either complacency or premature compliance expenditure.
Governance in Action Pty Ltd can assist clients with thinking about what early-stage planning may be required or helpful in relation to nature reporting.
David Cantrick-Brooks FGIA FCG, Principal & Director of Governance in Action Pty Ltd, would be pleased to assist with enquiries. Please feel free to reach out via LinkedIn or via gia.net.au.
AI-assisted tools and techniques were used here to support the research, drafting and editing of this publication. Responsibility for the final content rests with David Cantrick-Brooks.
Whilst accounting and legal terms and references may be contained in this publication, it does not constitute or purport to be or represent accounting or legal advice of any kind – whatsoever. Readers should seek their own independent professional advice.
