CSSB In Brief – A plain and simple overview of the Exposure Draft on nature-related disclosures

Background

The International Sustainability Standards Board (ISSB) has published for comment Exposure Draft, “IFRS Sustainability Disclosure Practice Statement 1, Nature-related Disclosures.” The proposed Practice Statement is intended to support entities applying IFRS Sustainability Disclosure Standards in identifying, assessing and disclosing material information about nature-related risks and opportunities that could reasonably be expected to affect an entity’s prospects.

Nature encompasses a broad range of environmental matters and the relationships between entities and the natural environment. Nature-related risks and opportunities may arise through an entity’s dependencies and impacts on nature and may affect an entity’s prospects. The proposed Practice Statement contains requirements that are intended to help entities determine what nature-related information is material to primary users of general-purpose financial reports and how to properly disclose that information. The proposed requirements will supplement requirements in IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures.

The proposed Practice Statement should be read together with the Accompanying Guidance and Basis for Conclusions. Respondents are encouraged to consider the full package of materials when providing feedback.

What is an IFRS Practice Statement?

The ISSB proposes that requirements for nature-related disclosures be set out in an IFRS Practice Statement. An IFRS Practice Statement is a form of standard setting the ISSB uses to issue requirements and guidance. The ISSB follows the same process for developing a Practice Statement as it does for developing Sustainability Disclosure Standards, including the publication of an exposure draft and the required period for consultation.

A Practice Statement is a stand-alone document, designed to be applied with IFRS Sustainability Disclosure Standards. An entity would not be required to apply the Practice Statement to state compliance with IFRS Sustainability Disclosure Standards. However, they could choose to apply it. By applying the nature-related proposed Practice Statement, an entity could provide high-quality, decision-useful information about nature-related risks and opportunities more comparably and consistently than if they didn’t apply it.

How would the Practice Statement apply in Canada?

The Canadian Sustainability Standards Board (CSSB) serves the public interest by setting and maintaining high-quality sustainability disclosure standards for Canadian entities and by contributing to the development of high-quality, internationally recognized sustainability disclosure standards.

The CSSB issued CSDS 1, General Requirements for Disclosure of Sustainability-related Financial Information, and CSDS 2, Climate-related Disclosures, as Canada’s first sustainability disclosure standards. CSDS 1 and CSDS 2 are voluntary standards unless their application is required by legislation, regulation or another relevant authority.

The nature-related proposed Practice Statement is relevant in Canada because entities applying CSDS 1 may need to consider sustainability-related risks and opportunities beyond climate or other sustainability matters when those risks and opportunities could reasonably be expected to affect the entity’s prospects. Nature-related matters may therefore arise in applying the existing requirements in CSDS 1 even in the absence of specific Canadian nature-related disclosure requirements.

Key features of the Exposure Draft

Summary of ISSB’s proposals¹

Supporting companies’ understanding of what nature-related information to disclose

The Exposure Draft proposes requirements that would help companies understand:

• what nature-related risks and opportunities are;
• how nature-related risks and opportunities can affect a company’s prospects; and
• what information about these risks and opportunities is useful to investors in making decisions relating to providing resources to the company

Relationship between dependencies and impacts and nature-related risks and opportunities

The Exposure Draft explains that nature-related risks and opportunities arise from a company’s and other parties’ dependencies and impacts on environmental resources and their associated benefits, such as those provided by ecosystem services. It specifies that a company might need to provide information about its dependencies and impacts to enable investors to understand the company’s nature-related risks and opportunities.

Connecting nature-related and climate-related information

A company’s dependencies and impacts, and the resulting risks and opportunities for the company, can have both nature-related and climate-related aspects. The close connections between nature and climate mean that a company’s nature-related and climate-related risks and opportunities can be interrelated and can present the company with synergies and trade-offs. These connections can affect:

• how a company identifies, assesses and manages its nature-related and climate-related risks and opportunities (e.g., a company might undertake an integrated scenario analysis in assessing its nature-related and climate-related risks and opportunities); and
• how a company responds to these risks and opportunities (e.g., a company might have an integrated transition plan to respond to its nature-related and climate-related risks and opportunities).

The Exposure Draft specifies how to provide information about nature-related and climate-related risks and opportunities in a connected manner.

Location of assets and activities

A company would be required to consider the locations of assets and activities throughout the value chain, including characteristics of nature in those locations in identifying its nature-related risks and opportunities across core content areas of governance, strategy, risk management and metrics and targets.

The Exposure Draft package includes an Accompanying Guidance with four examples illustrating how a company would apply the proposed requirements to report information related to the location of assets and activities throughout the value chain.

Consideration of Indigenous Peoples, Local Communities and affected stakeholders

A company would be required to consider interactions – including engagement – with Indigenous Peoples, Local Communities and affected stakeholders:

• in identifying its nature-related risks and opportunities; and
• in disclosing information about its nature-related risks and opportunities across core content areas of governance, strategy and risk management.

The Exposure Draft describes categories of society and stakeholders comprising Indigenous Peoples, Local Communities and affected stakeholders, and how interactions with them can give risk to or support responses to nature-related risks and opportunities that could reasonably be expected to affect a company’s prospects. These categories are drawn from the Taskforce on Nature-related Financial Disclosures (TNFD) framework. A company would not be required to provide disclosures using these categories but would be required to identify the groups of people covered by its disclosures across core content areas.

1 Source: Exposure Draft—Snapshot, “IFRS Sustainability Disclosure Practice Statement 1, Nature-related Disclosures.”

Specific disclosures, including metrics

IFRS S1 already requires a company to provide material information about governance, strategy, risk management, and metrics and targets for all its sustainability-related risks and opportunities, including those related to nature. The Exposure Draft proposes several specific incremental disclosures about nature-related risks and opportunities for which the ISSB’s research has identified that investors have a clear and common need for information. These include:

• Response to, and plans to respond to, nature-related risks and opportunities
• Resilience informed by scenario analysis
• Introduce two cross-industry metrics: the amount and percentage of assets or business activities (i) vulnerable to nature-related risks and (ii) aligned with nature-related opportunities.
• Nature-related targets about each nature-related target that it has set to monitor progress towards achieving its strategic goals or is required to meet by law or regulation.

Proportionality mechanisms and transition relief

The Practice Statement is designed so a range of companies could be able to apply it. The Exposure Draft proposes proportionality mechanisms for the proposed disclosure requirements. These proportionality mechanisms align with the relevant mechanisms in IFRS S2.

The Exposure Draft also includes a transition relief from disclosing comparative information in the first annual reporting period in which a company applies the Practice Statement. This relief is consistent with the transition relief provided in IFRS S1.

Table 1 – Proportionality mechanisms specific to the Practice Statement

Canadian consultation focus

The CSSB has issued this Canadian consultation to gather input on the proposed Practice Statement to better understand the implications of the proposals for Canada. The CSSB is seeking to:

• collect input and feedback from a diverse base of interested and affected parties on specific areas of inquiry; and
• ensure Canadian Sustainability Disclosure Standards are fit for purpose in Canada, recognizing the benefits of a global baseline.

To meet these objectives, the CSSB requests input on the following topics:

• appropriateness for Canadian application;
• Canadian modifications;
• CPA Handbook inclusion and future decisions; and
• Indigenous Peoples in Canada.

While the CSSB is particularly interested in feedback on the topics identified below, it welcomes comments on all aspects of the Exposure Draft. Respondents are encouraged to provide the reasons for their views and, where possible, identify the relevant sections of the proposed Practice Statement on nature-related disclosures.

Appropriateness for Canadian application

The ISSB developed the proposed IFRS Practice Statement under its due process for global application.

1. Assuming the ISSB finalizes and approves the proposed IFRS Practice Statement, is it appropriate for application in Canada?
2. If not, identify the aspects and circumstances that make it inappropriate for Canadian entities applying CSDS 1.
3. Would another form of non-authoritative support material be more appropriate for the Canadian market?

Canadian modifications

1. The CSSB recognizes the benefits of global standardization of sustainability disclosure standards to the Canadian public interest and therefore supports the incorporation of IFRS Sustainability Disclosure Standards in Canada to the greatest extent possible. The Board also recognizes that there may be circumstances where amendments are required in the Canadian public interest. The CSSB has developed its Criteria for Modification Framework, which you can find in Appendix A of the Due Process Manual. The Board would make amendments to the IFRS Sustainability Disclosure Standards in Canada based on Criteria for Modification developed from this Framework.
2. Are any additions, deletions or other modifications needed for Canada under the Criteria for Modifications set out in the Appendix?
3. If so, identify and explain each proposed modification. Explain how it would serve the Canadian public interest while maintaining the quality of Canadian sustainability disclosure.

Handbook inclusion and future decisions

The CPA Canada Handbook – Sustainability (Handbook – Sustainability) is the official electronic reference source for Canadian sustainability disclosure standards, including CSDS 1 and CSDS 2.

1. Should the final IFRS Practice Statement be included in the CPA Canada Handbook – Sustainability as non-authoritative material? Why or why not?
2. If included, what should the CSSB clarify about its status, use or relationship to CSDS 1 and CSDS 2?

Indigenous Peoples in Canada

Indigenous Peoples and Local Communities have relationships with nature that are distinct from those of other societal groups. Indigenous Peoples and Local Communities often manage environmental resources, have traditional or local knowledge of these resources, have cultural practices that are strongly linked to these resources or have distinct rights linked to these resources. The IFRS Practice Statement proposes to require an entity to consider interactions – including engagement – with Indigenous Peoples, Local Communities and affected stakeholders in identifying its nature-related risks and opportunities and in disclosing information about them across core content areas of governance, strategy and risk management.

In Canada, Indigenous Peoples’ rights are recognized in Section 35 of the Canadian Constitution and in the United Nations Declaration on the Rights of Indigenous Peoples Act, 2021, which includes provisions to uphold free, prior and informed consent.

Do the proposed disclosure requirements provide sufficient guidance for entities to consider their interactions, including engagement, with Indigenous Peoples when identifying, assessing and disclosing nature-related risks and opportunities? Why or why not?

Invitation to comment

Provide your input

The CSSB welcomes feedback from any interested party on any or all the questions posed in this Exposure Draft.

You can provide feedback to the CSSB on the proposals in a variety of ways:

• Participate in the Connect.FRASCanada.ca survey.
• Connect directly with the CSSB by attending a discussion session on the Exposure Draft. To register for a session, please visit our Project Page or email [email protected] to set up an individual session.
• Write a response letter and upload it via our online platform.

Note: Response letters will be posted online shortly after this Exposure Draft closes for comment. Confidentiality can be requested when uploading letters via the online form.

Helpful tips when participating in a consultation:

• Comments are most helpful if they relate to a specific paragraph or group of paragraphs found in the Exposure Draft.
• If you identify a potential issue in this Exposure Draft’s proposals, we encourage you to clearly explain the issue and include a suggested alternative, supported by specific reasoning.
• The CSSB does not expect you to respond to every single question posed – only those to which you feel you can or should respond.

We welcome feedback until January 29, 2027.

Learn more

Register for our live webinar taking place on December 3, 2026, to learn more about the Exposure Draft.

For more information on the CSSB’s role in setting sustainability disclosure standards, visit our About page and read our Frequently Asked Questions.

Next steps

The next steps for these projects are as follows:

January 29, 2027: CSSB’s comment period ends

February 19, 2027: ISSB’s comment period ends

To follow: The CSSB will consider feedback on the Exposure Draft and decide how to proceed.

Stay informed

To learn more about the project and stay current with updates, subscribe to The Standard and visit our project page.

Email our staff: [email protected]