ISSB consults on changes to climate disclosure standard IFRS S2

ISSB consultation on changes to IFRS S2

On 28 April 2025, the International Sustainability Standards Board (ISSB) published an Exposure Draft proposing targeted amendments to its climate disclosure standard, in response to challenges to the application of IFRS S2 raised by stakeholders (see ISSB press release). 

The amendments are not focused on reductions in disclosures about GHG emissions but are instead aimed at making it easier for companies to apply the ISSB standard, while retaining the decision-usefulness of information provided to investors. The reliefs are intended to reduce the risk of potential duplication of reporting and the related costs associated with applying the ISSB standards. 

The Exposure Draft is open for comment until 27 June 2025. The ISSB aims to finalise these amendments by the end of 2025.

The proposed amendments relate to the application of GHG emissions disclosure requirements in IFRS S2, in particular realting to financed emissions, including:

• relief from measuring and disclosing Scope 3 Category 15 GHG emissions associated with derivatives and some financial activities;
• relief from the use of the Global Industry Classification Standard (GICS), in some circumstances, in disclosing disaggregated financed emissions information;
• clarification on the jurisdictional relief to use a measurement method other than the Greenhouse Gas Protocol for measuring GHG emissions; and
• permission to use jurisdiction-required Global Warming Potential (GWP) values that are not from the latest Intergovernmental Panel on Climate Change (IPCC).

Entities can choose whether to apply the reliefs, and jurisdictions can choose whether to adopt them without affecting their degree of alignment with ISSB Standards. Companies currently applying IFRS S1 and IFRS S2 as issued in June 2023 can continue to do so, while jurisdictions that have their own standards that are based on ISSB standards will be encouraged to maintain consistency to make it more straightforward for preparers globally to report on an efficient basis and to ensure the global baseline is maintained. 

ISSB guides to IFRS S2

The IFRS Foundation has published educational material in 2025 (in the form of Q&As) about the requirements for an entity to disclose its GHG emissions in accordance with IFRS S2.

The IFRS Foundation also published a guide in January 2025 entitled “Applying IFRS S1 when reporting only climate-related disclosures in accordance with IFRS S2”. The guide is aimed at helping preparers understand which requirements in IFRS S1 are applicable when a company discloses information on only climate-related risks and opportunities in accordance with IFRS S2. 

In response to concerns about data availability and preparers’ readiness, the ISSB decided to provide transition reliefs in IFRS S1 and IFRS S2. A company is required to apply IFRS S1 and IFRS S2 together but paragraph E5 of IFRS S1 allows a company, in its first year of applying the ISSB standards, to disclose information on only its climate-related risks and opportunities (in accordance with IFRS S2) - the so-called “climate-first” approach. 

This transition relief temporarily narrows the scope of reporting in accordance with IFRS S1 from the provision of information about all sustainability related risks and opportunities that could reasonably be expected to affect a company’s prospects to the provision of information about only climate-related risks and opportunities. It does not otherwise alter the requirements of IFRS S1. Companies choosing to apply this transition relief are required to apply the requirements of IFRS S1 insofar as they relate to disclosing information about climate-related risks and opportunities in accordance with IFRS S2 and the guide explains this in more detail.

For more information on the ISSB standards, see our previous blog posts here and here.