Nature Disclosure Fight at the ISSB: What a Voluntary Standard Would Mean for Brazilian Companies

Why it matters: Many national regulators copy whatever the ISSB publishes. A Practice Statement leaves each country to decide how binding nature disclosure becomes, so the format chosen in London sets how far Brazil’s regulators and companies can drift from their peers.

A Practice Statement is guidance that regulators can harden

The difference between the two formats is legal weight, not process. According to the source, a Practice Statement goes through full due process and public consultation, like a standard. What it lacks is a mandate. The ISSB argued in April that this reduces disruption for companies still implementing IFRS S1 and S2, and noted that jurisdictions can make it mandatory.

That last point is exactly what worries the investors. If one country makes the whole document binding, another uses only parts, and a third leans on S1 and S2 to cover nature through general materiality, a multinational investor will receive three different sets of data. The letter says this would reduce comparability and raise complexity for both preparers and investors. I think the investors have the better of this argument: a format that invites three national versions of the same disclosure is a poor basis for comparing companies across borders.

What is still undecided

Three things remain open. First, the consultation has not closed in the material available, so the ISSB has not said whether it will move from a Practice Statement to a standard. Second, the letter asks the ISSB to publish the process, conditions and timeline for a dedicated nature standard, which means no such timeline exists today. Third, the letter asks how consistent application across jurisdictions will be delivered, and the ISSB has not answered.

What has to happen: the consultation responses must come in, the ISSB must weigh investor demand for a mandatory text against preparer concerns about workload, and it must state publicly whether the Practice Statement is a final form or a step toward a standard. Until then, any company planning around a binding nature rule is planning around something that does not exist.

The Brazilian parallel

Brazil adopted the ISSB’s general and climate standards through its own channel. The Comitê Brasileiro de Pronunciamentos de Sustentabilidade (CBPS) issues the local versions, and the Comissão de Valores Mobiliários (CVM) decides which companies must apply them and when. Check the current CVM resolution for the exact calendar, because it is not in the source material and should not be assumed.

The structure matters here. In Brazil, the ISSB text does not bind anyone until the CVM says so. If the ISSB publishes only a Practice Statement, the CVM would face the same choice the investors describe: stay silent, accept nature as part of S1 materiality, or make the guidance mandatory. A Brazilian nature requirement would then be a regulatory decision, not an automatic import. I have no Brazilian figure on how many listed companies currently report nature-related information, so that comparison is missing rather than estimated.

Winners and losers

Asset managers that signed the letter gain if a mandatory standard arrives, because they get comparable data for portfolio analysis. Companies that already report under S1 and S2 and want to avoid a new workload gain from the Practice Statement route. Companies exposed to land use, water and pollution, which the Federated Hermes statement names as nature topics, lose predictability under a patchwork, since they may face different demands from each investor and regulator.

What it means for Brazilian companies and exporters

For listed Brazilian companies, the near-term task is S1 and S2 compliance as the CVM schedules it. Nature is not a separate legal line item yet, and the ISSB’s own consultation shows it may not become one soon.

For agribusiness, mining and any company with operations tied to water or land, the practical risk is indirect. Foreign investors who signed this letter, such as European asset managers, will ask for nature data whether or not the ISSB mandates it. Companies that already map their dependencies on water and land will answer faster than those that wait for a rule.

Exporters should follow two tracks at once: the outcome of the ISSB consultation, and the reaction of the CBPS and the CVM. A company that builds nature data now, using the voluntary frameworks available, will adapt more easily to either result. One that waits for certainty may start late if a jurisdiction makes the Practice Statement binding.

The ISSB is only the first move. What Brazilian companies will actually face depends on what the CBPS and the CVM do after it, and on whether Brazil waits for a standard or acts on the Practice Statement.

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