ISSB: IFRS Sustainability Disclosure Standards (S1 & S2)

Status, September 2026: As of April 2026, 28 jurisdictions had adopted IFRS S1 and/or S2 on a voluntary or mandatory basis, and 12 more planned to. The ISSB is also amending priority SASB Standards and developing nature-related requirements, with an exposure draft targeted for October 2026. Source: S&P Global.

What Are IFRS S1 and S2?

The International Sustainability Standards Board (ISSB), part of the IFRS Foundation, published its first two sustainability disclosure standards in June 2023:

• IFRS S1 — General Requirements for Disclosure of Sustainability-related Financial Information: Establishes the framework for disclosing material sustainability-related risks and opportunities
• IFRS S2 — Climate-related Disclosures: Specific requirements for climate-related disclosure, building on TCFD recommendations

Together, they create a global baseline for investor-focused sustainability disclosure, designed to be adopted by individual jurisdictions alongside their existing financial reporting requirements.

Who They Apply To

ISSB standards apply when adopted by national jurisdictions. Application varies:

• UK: UK Sustainability Reporting Standards (UK SRS S1 and S2), based on the ISSB standards, issued in February 2026 for voluntary use; the FCA has proposed requiring listed companies to report against them from January 2027, with final rules expected in autumn 2026
• Australia: Mandatory climate disclosure under AASB S2 (based on IFRS S2), phased in from 2025 for the largest entities, with further groups from July 2026 and July 2027
• Canada: The CSSB's standards (CSDS 1 and 2, based on S1 and S2) are voluntary; securities regulators paused work on a mandatory climate rule in April 2025
• Japan: SSBJ standards (based on ISSB) become mandatory for Prime Market companies with a market capitalization of ¥3 trillion or more for years ending March 2027, extending to ¥500 billion or more by March 2029
• Singapore, Hong Kong: Climate disclosures for listed companies phased in from 2025; Singapore adds large non-listed companies from FY2030, and Hong Kong plans full ISSB-aligned reporting by large publicly accountable entities by 2028
• Additional jurisdictions are in consultation or adoption processes

Key Requirements

IFRS S1 — General Requirements:

• Disclose material information about sustainability-related risks and opportunities that could reasonably be expected to affect cash flows, access to finance, or cost of capital
• Cover all sustainability topics, not just climate
• Apply single (financial) materiality
• Follow four TCFD pillars: Governance, Strategy, Risk Management, Metrics & Targets
• Connected with financial statements — sustainability information should be consistent with financial reporting

IFRS S2 — Climate-related Disclosures:

• Governance: Board and management oversight of climate-related risks and opportunities
• Strategy: Climate-related risks and opportunities, their effects, climate resilience assessment (scenario analysis)
• Risk management: Processes for identifying, assessing, prioritizing, and monitoring climate risks
• Metrics and targets: Scope 1, 2, and 3 GHG emissions, transition plan disclosures, climate-related targets

Cross-cutting requirements:

• Disclose in connection with related financial statements
• Report at the same time and for the same period as financial statements
• Include comparative information
• Use reasonable and supportable information without undue cost or effort

Timeline

• June 2023: IFRS S1 and S2 published
• January 2024: Standards effective for annual reporting periods beginning on or after this date
• 2024-2026: National jurisdictions adopting and transposing into local requirements; by April 2026, 28 had adopted the standards on a voluntary or mandatory basis
• December 2025: ISSB issues targeted amendments to the GHG emissions requirements in IFRS S2 (effective for periods beginning on or after January 1, 2027, with early application permitted)
• 2026: ISSB aims to finalize amendments to the SASB Standards, which support industry-specific disclosure under S1 and S2
• October 2026: Exposure draft on nature-related disclosures expected, proposed as an IFRS Practice Statement that complements S1 and S2
• Transition reliefs: Companies applying for the first time can claim various reliefs, including exemption from Scope 3 and comparative data in the first year

Compliance Steps

1. Determine jurisdiction requirements: Check whether your jurisdiction has adopted ISSB and any local modifications
2. Assess materiality: Identify sustainability topics creating financial risks or opportunities (financial materiality focus)
3. Climate disclosure preparation: Build GHG inventory (Scopes 1, 2, 3), conduct climate scenario analysis, document transition plans
4. Governance documentation: Ensure board and management roles in sustainability oversight are clearly defined
5. Integration with financial reporting: Ensure consistency between sustainability and financial disclosures
6. Metrics and targets: Establish measurable targets for material sustainability topics
7. Reporting: Prepare disclosures as part of general purpose financial reports

How Council Fire Can Help

Council Fire helps organizations implement ISSB-aligned disclosure — from materiality assessment and GHG inventory through scenario analysis and integrated reporting. We navigate the intersection of ISSB, CSRD, and national requirements. Contact us for ISSB implementation support.