Key Climate and Nature Disclosure Trends for the Year Ahead

Roohi Ghelani

Principal Consultant

London

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Roohi Ghelani

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Climate and nature reporting is entering a new phase. 

While debate has moved on from whether organisations should disclose sustainability-related information, attention is now turning to the quality, usefulness, and credibility of disclosures. And how they help organisations and investors understand future performance, resilience, and value creation opportunities. 

One of the most thought-provoking observations from this year’s IFRS Foundation Conference, which Anthesis was proud to sponsor, came from Saker Nusseibeh, CEO of Federated Hermes, who argued that investors need “the truth, the whole truth, and nothing but the truth”. 

While the phrase may sound simple, it neatly captures many of the conversations currently shaping climate and nature reporting. 

In his address, Nusseibeh proposed that investors and other users of company reports and disclosures need: 

• The Truth – the provision of accurate and factual information. 
• The Whole Truth – information that connects sustainability disclosures to strategy, financial performance and value creation. 
• Nothing But The Truth – information that does not distort reality or include non-material data as a diversionary tactic. 

In the context of purely financial disclosures, this is well understood. But when integrating climate and sustainability information, preparers need to be increasingly diligent in defining sustainability topics that are financially material.  

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Across the conference, discussions repeatedly returned to a common challenge: how to ensure sustainability disclosures become more decision-useful as reporting requirements expand and stakeholder expectations increase.  

When determining the level of detail to include in climate and nature risk and opportunity modelling and disclosures, how do businesses decide what to include and what to leave out?  

A useful starting point is to consider the expectations of providers of capital for that sector: what information do investors need to understand how climate- and nature-related risks and opportunities could affect the company’s future performance, resilience, and value? 

This includes considering whether qualitative insights are sufficient or whether quantitative analysis is needed to explain potential impacts on performance. 

The themes emerging from those conversations and workshops provide a useful guide to the disclosure trends organisations are likely to encounter over the coming year.

Do your disclosures help organisations and investors understand future risks, performance, resilience and value creation opportunities?

Four disclosure trends shaping climate and nature reporting 

1. Materiality is becoming more important, not less. As reporting requirements increase, organisations are under pressure to determine what information is genuinely decision-useful for investors. The key challenge is often not whether additional information can be disclosed, but whether it improves understanding of future performance and value. 
2. Less can be more. The rise of increasingly lengthy sustainability reports has been challenged. Some argue that concise, focused disclosures are more effective than extensive narratives that bury key messages. 
3. Sector-specific insights remain critical. SASB standards continue to provide an important framework for identifying financially material sustainability issues and improving comparability across organisations operating in the same industries.  
4. Integrated thinking is becoming essential. Effective implementation of IFRS S1 and S2 (or AASB S2) relies on collaboration across sustainability, finance, risk, and strategy functions. Organisations making the most progress are treating reporting as a business-wide effort rather than the responsibility of a single team. 

Key opportunities

One of the clearest opportunities is the growing alignment between sustainability and finance. 

• A shared language between finance and sustainability is needed. Capital still crosses borders, investors still need information. 
• Financial and sustainability disclosures offer complementary perspectives through ‘the whole truth.’ 
• CSOs and the sustainability function need to move from back-office to front-office; getting in front of the CFO, CEO, etc., to ensure investment flows into projects and be consulted on broader business decisions. 

Key uncertainties

While the direction of travel is becoming clearer, several areas continue to raise important questions. 

• Technology and AI offers opportunities but also presents new questions on judgement, trust, and credibility. 
• Anticipated Financial Effects remain assumption-heavy in practice, which keeps raising questions about credibility and comparability. 
• Nature reporting is another area to watch. Organisations are beginning to apply the same questions to nature they have spent recent years addressing for climate: what is material, how should it be measured, and how should it be reflected in disclosures and decision-making? 

Other key topics to watch

Several broader themes have surfaced that we expect will remain key topics for the next six to twelve months: 

• If asset risk isn’t being priced in today, is the balance sheet actually telling the truth? Several speakers questioned whether current depreciation and CAPEX assumptions still hold up once climate and nature risk are factored in. 
• Investors are interested in the value creation story. They want to see linkage to financials and strategy through integrated reporting.  
• Teamwork – successful implementation of integrated thinking for IFRS S1 and S2 reporting comes from cross-functional efforts internally.
• After three years of IFRS S1 & S2, 46 jurisdictions have adopted or are in the process of adopting the standards with 18 jurisdictions expecting reporting on 2026 data. 
• As the ISSB enters its fourth year, it is rolling out further capacity-building through a training partners programme.
• The rationale for nature being introduced through a Practice Statement rather than a Standard is to avoid disruption to the regulation of S1 & S2. However, it will still go through consultation and the same process as a new standard would. Additionally, the Practice Statement can reference TNFD for metrics and the ISSB will encourage preparers to confirm compliance with the Practice Statement in their disclosures. 
• Anticipated Financial Effects is difficult, but is materially important for providing live, decision-useful information rather than the typically retrospective information provided by reports, benchmarks, and standard setters.  A need was identified for a specific Anticipated Financial Effects working group to enhance confidence and use of quantification.  
• Materiality; single vs double, financial vs impact – the ESRS are designed for multi-stakeholder use and the ISSB for investors only. But they are interoperable to a degree. The recommendation from practitioners was to see a DMA as a build to a single financial materiality assessment, as long as the results and conclusions are distinguishable from each other. 
• SASB standards remain critical to understanding sector-specific risks and opportunities. In the absence of EFRAG sector standards, and with the ISSB leading consultations on updates (currently Agricultural Products, Meat, Poultry & Dairy, and Electric Utilities & Power Generators), preparers are encouraged to engage with and use these standards to produce comparable and grounded disclosures. 
• Six capitals thinking is starting to surface externalities that a traditional P&L simply doesn’t capture, a useful frame for clients still treating sustainability as a bolt-on rather than part of value creation.