The ISSB was established in November 2021 to develop a comprehensive global baseline of high-quality sustainability disclosure standards to meet investors’ information needs. In March 2022, the ISSB launched a consultation on its first draft IFRS Sustainability Disclosure Standards (IFRS S1 and IFRS S2). After a consultation period of 120 days, the ISSB redeliberated the proposals in the draft Standards and decided to finalize the proposals.

Key requirements

The main requirements in IFRS S2 broadly reflect the proposals in ED/2022/S2 "Climate-related Disclosures" with changes introduced in the following areas:

• Strategy and decision-making, including transition planning
• Climate resilience
• Greenhouse gas emissions
• Industry-based requirements
• Proportionality of the requirements
• Current and anticipated financial effects of sustainability-related and climate-related risks and opportunities on an entity’s financial performance, financial position and cash flows

Effective date and transition

An entity is required to apply IFRS S2 for annual reporting periods beginning on or after January 1, 2024. Earlier application is permitted. If an entity applies IFRS S2 earlier, it is required to disclose that fact and apply IFRS S1 at the same time.

The following transitional provisions are available:

• Comparative information: An entity is not required to disclose comparative information in the first annual reporting period in which it applies IFRS S2.
• Greenhouse Gas Protocol: If, in the annual reporting period immediately preceding the date of initial application, the entity used a method for measuring its greenhouse gas emissions other than the ‘Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004)’, the entity is permitted to continue using that other method in the first annual reporting period in which the entity applies IFRS S2.
• Scope 3 greenhouse gas emissions: In the first annual reporting period in which an entity applies IFRS S2, the entity is not required to disclose its Scope 3 greenhouse gas emissions which includes, if the entity participates in asset management, commercial banking or insurance activities, the additional information about its financed emissions.

Additional information

The following additional information is available on the IFRS Foundation website and on Canada Centre for Financial Reporting (CFR):

• ISSB press release
• Basis for conclusions on S1
• Effects analysis on IFRS S1 and IFRS S2
• Project summary of IFRS S1 and IFRS S2
• Feedback statement for IFRS S1 and IFRS S2
• Our CFR summary of IFRS S2
• Our CFR project page on Climate-related disclosures