IFRS S2 Climate-related Disclosures

1. Understand the standard: Download and review the full IFRS S2 Climate-related Disclosures standard (freely available at ifrs.org), along with the accompanying IFRS S1 General Requirements standard, to understand the disclosure framework and its four core pillars.

1. Assess applicability: Determine whether IFRS S2 applies to your organization based on your jurisdiction's regulatory requirements or voluntary adoption decisions. Check whether your local securities regulator or stock exchange has mandated or referenced ISSB standards.

1. Conduct a gap analysis: Compare your current climate-related reporting practices against IFRS S2 requirements across governance, strategy, risk management, and metrics and targets — including Scope 1, 2, and 3 GHG emissions and applicable SASB industry-based metrics.

1. Identify applicable SASB industry standards: Determine which SASB Standards apply to your industry sector(s) and review the industry-specific disclosure topics and metrics required under IFRS S2.

1. Build internal processes and data systems: Establish or strengthen internal data collection, governance oversight structures, and cross-functional working groups (finance, sustainability, risk, legal) to gather and validate the required climate-related information.

1. Prepare disclosures: Draft climate-related disclosures in accordance with IFRS S2 requirements, typically for inclusion in or alongside your general-purpose financial reports (e.g., annual report, integrated report).

1. Engage external assurance: Engage an independent auditor or assurance provider to review your disclosures for completeness and accuracy against the standard's requirements, as assurance is increasingly expected by regulators and investors.

1. Publish and iterate: Publish your IFRS S2-aligned disclosures and use feedback from investors, regulators, and assurance providers to improve the quality and completeness of disclosures in subsequent reporting cycles.

IFRS S2 requires organizations to disclose information across four core pillars, mirroring the structure established by the Task Force on Climate-related Financial Disclosures (TCFD):

Governance: Organizations must disclose the governance processes, controls, and procedures used to monitor, manage, and oversee climate-related risks and opportunities. This includes identifying the board body or individual responsible for climate oversight, how climate considerations are integrated into strategy and risk management, and how management is held accountable.

Strategy: Disclosures must cover the actual and anticipated effects of climate-related risks and opportunities on the organization's business model, value chain, strategy, and financial position. This includes scenario analysis using both 1.5°C and higher-warming scenarios, assessment of climate resilience, and the financial effects of climate risks on assets, liabilities, revenues, and expenditures.

Risk Management: Organizations must describe the processes used to identify, assess, prioritize, and monitor climate-related risks and opportunities, and how these processes are integrated into the overall enterprise risk management framework.

Metrics and Targets: This pillar requires disclosure of quantitative data used to measure and manage climate-related risks and opportunities, including: cross-industry metrics (Scope 1, Scope 2, and Scope 3 GHG emissions measured in accordance with the GHG Protocol; climate-related transition and physical risks; capital deployment toward climate-related risks and opportunities; and internal carbon prices); industry-based metrics drawn from the applicable SASB Standards; and any climate-related targets set by the organization, including progress against those targets.

IFRS S2 has rapidly become one of the most influential climate disclosure frameworks globally since its publication in June 2023. Developed by the International Sustainability Standards Board (ISSB) — a body established by the IFRS Foundation in 2021 — it was designed to create a global baseline for investor-focused climate reporting. Within two years of publication, over 20 jurisdictions had adopted, incorporated, or announced plans to align with ISSB standards, including Australia, Canada, Japan, Singapore, the UK, and several emerging markets. The European Union's ESRS standards are designed to be interoperable with IFRS S2, reducing duplication for multinational companies.

IFRS S2's market position is strengthened by its consolidation of prior frameworks. The ISSB absorbed the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation (which housed SASB and the Integrated Reporting Framework), giving IFRS S2 a broad coalition of institutional support. Its explicit interoperability with TCFD recommendations — which had already been widely adopted by financial institutions and large corporates — eased the transition for many preparers. The CDP also announced it would incorporate IFRS S2 requirements into its climate questionnaire, dramatically expanding its effective reach.

Compared to alternatives, IFRS S2 occupies a distinct investor-focused niche. GRI Standards are broader and stakeholder-oriented, while ESRS E1 applies specifically to EU-regulated entities. The SEC's climate disclosure rules (currently subject to legal challenges) address a similar investor audience but are jurisdiction-specific. IFRS S2's global baseline ambition gives it a unique position as the de facto international standard for capital markets, and demand for professionals with IFRS S2 expertise — particularly in audit, finance, and sustainability reporting — is growing rapidly in jurisdictions where adoption has been mandated.

The origins of IFRS S2 lie in the fragmented landscape of voluntary climate disclosure frameworks that proliferated in the 2010s — including TCFD, SASB, CDP, CDSB, and the Integrated Reporting Framework — which created significant complexity for both preparers and investors. At COP26 in Glasgow in November 2021, the IFRS Foundation announced the formation of the International Sustainability Standards Board (ISSB) to consolidate these frameworks and create a single, authoritative global baseline for sustainability-related financial disclosures. The ISSB simultaneously absorbed the CDSB and the Value Reporting Foundation (VRF), bringing SASB Standards and the Integrated Reporting Framework under the IFRS umbrella.

The ISSB published its first two standards — IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures) — in June 2023, following an extensive public consultation process that attracted thousands of comment letters from preparers, investors, and regulators worldwide. IFRS S2 was explicitly built on the TCFD framework's four-pillar structure and incorporated SASB's industry-specific metrics, giving it immediate credibility with institutional investors already familiar with those frameworks. The standard became effective for annual reporting periods beginning on or after 1 January 2024, with early adoption permitted. Since publication, the ISSB has continued to develop additional guidance, including targeted amendments to GHG emissions disclosure requirements and sector-specific guidance for industries such as mining, oil and gas, and banking.