ESG Quick Guide: ISSB standards

The International Financial Reporting Standards (“IFRS”) Foundation created the ISSB in 2021 to develop a global baseline of sustainability disclosure standards that meets the information needs of investors. 

The IFRS Foundation is hoping to do for sustainability reporting what it did for financial reporting with the IFRS Accounting Standards.

In 2023, the ISSB published the final version of its first two global sustainability disclosure standards: 

• IFRS S1 - General Requirements for Disclosure of Sustainability-related Financial Information; and
• IFRS S2 - Climate-related Disclosures.

The ISSB’s intention is to provide a “building blocks” model with a global baseline that countries can adapt or add to if they decide to implement the ISSB standards into their national regimes.

The information required by the ISSB standards is designed to be provided alongside financial statements as part of the same reporting package.  

Voluntary – but a number of jurisdictions are in the process of incorporating the ISSB standards into national laws, making compliance with the ISSB standards (as adopted) mandatory (see below) 

More than 40 jurisdictions have implemented, or are in the process of  implementing, the ISSB standards into their regulatory frameworks (see here). 

Some countries have adopted the ISSB standards with jurisdiction-specific modifications that are designed to help the standards work at a national level (see “Interoperability” below).

The ISSB standards can be used by corporates, financial institutions and others. 

An entity should make sustainability-related financial disclosures on the same basis as the related financial statements (e.g. if an entity prepares consolidated financial statements for a parent and its subsidiaries, the sustainability-related financial disclosures should also relate to the same group). 

Companies were able to start using IFRS S1 and S2 on a voluntary basis for annual reporting periods beginning on or after 1 January 2024, with the first set of reports published in 2025. 

In the first year of reporting using the ISSB standards, companies are encouraged to prioritise reporting on climate-related risks and opportunities.

In the second year, companies are expected to provide full reporting on other sustainability-related risks and opportunities in addition to climate issues.

Entities should make disclosures at the same time as financial statements.

IFRS S1 

• Sets out overarching requirements for a company to disclose information about sustainability-related risks and opportunities that is useful to users of general purpose financial reports.
• Is designed to underpin all other ISSB standards in terms of setting scope, objective, core content, and presentation requirements.
• Uses the same the four pillars as the Task Force for Climate-related Financial Disclosures (“TCFD”) Recommendations in requiring entities to make disclosures about governance, strategy, risk management, metrics and targets.
• More detailed disclosures on certain sustainability topics may be developed in due course to supplement the general requirements in IFRS S1 (see “Next steps” below). 

IFRS S2 

• Sets out additional requirements that relate to climate-related risks and opportunities.
• Incorporates, and builds on, the TCFD Recommendations.
• Requires disclosure of Scope 1, 2 and 3 greenhouse gas (“GHG”) emissions. However, preparers do not have to report on Scope 3 emissions in the first year of reporting under the ISSB standards.
• Requires disclosure of (among other things): physical risks resulting from climate change; transition risks associated with the transition to a lower-carbon economy (which could include regulatory, technological, market, legal or reputational risks); and climate-related opportunities available to the entity.
• See below for transition plan requirements.  

IFRS S2 requires an entity to disclose both retrospective and forward-looking information about its response to climate-related risks and opportunities, including plans to achieve any climate-related targets. 

It does not require a preparer to produce a transition plan if it does not yet have one or to publish a transition plan where it has one. What it requires is the disclosure of certain information about how the preparer is preparing to transition.

IFRS S2 is based on, and builds on, the TCFD Recommendations. 

IFRS S2, paragraph 14(a)(iv) (on strategy and decision-making disclosures), requires disclosure of “any climate-related transition plan the entity has, including information about key assumptions used in developing its transition plan, and dependencies on which the entity’s plan relies”.

In June 2025, the ISSB published guidance on disclosures about transition plans (see here). The guidance is intended to support entities in applying IFRS S2. 

The ISSB guidance builds on the materials developed by the Transition Plan Taskforce ("TPT") . The IFRS Foundation (which is responsible for the ISSB) took over responsibility for the TPT's disclosure-specific materials in 2024. Click here to access the TPT materials on the ISSB website. 

For more information on transition plans, see our ESG Quick Guide: Transition plans. 

IFRS S2 incorporates, and builds on, the TCFD Recommendations. So, a company applying IFRS S2 will provide all of the information covered by the TCFD Recommendations. 

However, there are additional requirements in IFRS S2. 

These include requirements for companies to disclose: 

• industry-based metrics;
• information about their planned use of carbon credits to achieve their net emissions targets; and
• additional information about their financed emissions.

The IFRS Foundation has published a comparison of the requirements in IFRS S2 and the TCFD Recommendations.

The IFRS Foundation took over the monitoring of climate-related disclosures from the TCFD in 2024. The TCFD has since been disbanded.

The ISSB standards are designed to meet the information needs of investors. The standards therefore have a financial materiality focus, meaning that reporting entities must disclose material information about any sustainability-related risks and opportunities that may affect the entity’s financial position in the short, medium and long term.

Under the ISSB standards, information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that investors, lenders and other creditors make on the basis of those reports.

The EU’s Corporate Sustainability Disclosure Directive (“CSRD”) and European Sustainability Reporting Standards (“ESRS”), on the other hand, apply a double materiality standard. This requires in-scope companies to report on their impacts on people and the environment (impact materiality), as well as on how social and environmental issues affect them financially (financial materiality). 

The ISSB assumed responsibility for the SASB standards in 2022. 

IFRS S1 requires preparers to refer to and consider the SASB standards in identifying sustainability-related risks and opportunities, if no relevant IFRS sustainability disclosure standard is available.

For more information, see our ESG Quick Guide: SASB standards.

As noted above, the ISSB’s intention is to provide a global baseline that countries can adapt or add to if they decide to implement the ISSB standards into national law. 

To date, jurisdictions have taken a variety of approaches and some stakeholders have expressed concerns that the changes made by certain jurisdictions may be too extensive, making reporting across various jurisdictions difficult. 

This is a particular concern for investors and companies that have significant cross-border operations and must comply with more than one set of jurisdictional requirements. Significant changes to the ISSB standards at national level could lead to regulatory fragmentation and divergence, ultimately reducing some of the benefits that the ISSB standards set out to achieve.

For further information in relation to interoperability between the ISSB standards and the: 

• TCFD, see here;
• EU ESRS, see here; and
• Global Reporting Initiative (“GRI”), see here.

In November 2025, the ISSB announced that it is planning to develop nature-related disclosure requirements, building on its existing IFRS S1 and S2 sustainability disclosure standards (see ISSB press release). 

It is not clear at this stage whether this will result in a separate standard, amendments to existing standards or guidance.

The ISSB is aiming to have an exposure draft ready by the next biodiversity conference (COP17) in October 2026 in Armenia. 

The ISSB’s work will be subject to public consultation and will draw on the framework developed by the Taskforce on Nature-related Financial Disclosures (“TNFD”).  The TNFD announced that it will complete technical work in progress by Q3 2026 and pause any further technical guidance in order to support the ISSB (see TNFD press release).

For more information on the TNFD, see our ESG Quick Guide: Key Sustainability Disclosure Regimes: TNFD.

Access to the ISSB standards, guidance and other materials is free but you will first need to register 

• IFRS S1
• IFRS S2
• IFRS Sustainability Standards Navigator
• ISSB guidance & bases for conclusions
• IFRS guidance on transition plans
• IFRS - Transition Plan Taskforce resources
• Applying IFRS S1 when reporting only climate-related disclosures in accordance with IFRS S2
• Sustainability-related risks and opportunities and the disclosure of material information
• Disclosing information about anticipated financial effects applying ISSB Standards (IFRS educational material)
• Disclosing information about anticipated financial effects of sustainability-related risks and opportunities (IFRS blog post)
• SASB Standards Navigator
• IFRS Sustainability Knowledge Hub Courses
• IFRS - Implementation of ISSB standards by jurisdiction
• See image of “ESG Disclosure Pathway to Convergence” on IFC website

• ISSB publishes final versions of first two global sustainability disclosure standards
• ISSB consults on changes to climate disclosure standard IFRS S2
• ESG Quick Guide on SASB standards
• ESG Quick Guide on TCFD
• ESG Quick Guide on GRI standards
• Other ESG Quick Guides