The IFRS S1 and IFRS S2 standards do not mandate a specific audit level, governance structure or set of controls that must be implemented. However, they require organisations to provide disclosures about “the governance processes, controls and procedures the entity uses to monitor and manage sustainability-related risks and opportunities” (IFRS S1 Paragraph 25).

While the ISSB standards do not prescribe the assurance of disclosures, the standards are intended to produce information that is "verifiable" by third parties.Therefore, organisations may consider implementing suitable internal controls, board-level oversight and standardised data management processes to support this. Recommended guidance to support the development and improvement of corporate governance policies and procedures includes the IFC Corporate Governance Methodology and Tools and Achieving Effective Internal Control over Sustainability Reporting (ICSR) (IMA, 2023).

Neither IFRS S1 or S2 explicitly mandates a specific level of assurance. ISSB is a standard-setter and not a regulator, therefore the requirement for assurance, and whether it must be limited or reasonable, is a matter to be determined by regulatory authorities in the reporting jurisdiction.

For an overview of the requirements implemented in key jurisdictions, refer to the IFRS Jurisdictional Adoption Profiles, which include details on the assurance requirements adopted or proposed for each jurisdiction. Typically, jurisdictions are adopting a phased approach, starting with limited assurance and transitioning over time towards reasonable assurance.

The International Auditing and Assurance Standards Board (IAASB) has developed the International Standards on Sustainability Assurance (ISSA) 5000, which IFRS S1 and S2 can be assured against. Policymakers, standard setters and regulators in each jurisdiction will determine when and whether the use of ISSA 5000 is required. 

The ISSB Standards do not stipulate how organisations should approach this point, therefore it is a matter for the organisation to determine how it resources its data gathering efforts. The decision to hire external consultants versus building an internal solution depends on your organisation's technical maturity. Regardless of who prepares disclosures, it should be noted that, according to IFRS S1 requirements on responsibility and authorisation, management remains responsible for the disclosures included in general purpose financial reports. For organisations seeking to assure their sustainability-related financial disclosures (which it should be noted is not a requirement of the ISSB Standards), there may indeed be benefits to building internal solutions, to ensure greater internal ownership and accountability over the data, and support integration with financial systems.

However, external consultants can offer valuable skills to assist with methodology development and data gathering, and support technical aspects of disclosure, such as climate-related scenario analysis or Scope 3 greenhouse gas emissions calculations. Consultants can also be used to support ‘assurance readiness’ through advising on how to develop and implement suitable internal controls, and conducting pre-assurance gap analysis to identify potential weaknesses and areas for improvement in data gathering processes.

Comparative information is an important part of disclosures under the ISSB Standards, enabling investors to track a company’s performance over time. Under IFRS S1 (S1.70), companies are required to disclose comparative information in respect of the preceding period for all amounts disclosed in the reporting period. Comparative information may also need to be disclosed about narrative and descriptive information. 

Neither IFRS S1 or S2 explicitly mandates assurance. ISSB is a standard-setter and not a regulator, therefore the requirement for assurance is a matter to be determined by regulatory authorities in the reporting jurisdiction. Regardless of whether assurance is required, or is undertaken on a voluntary basis, maintaining a clear record of data sources, calculation methodologies and assumptions may be helpful. This ensures that the report preparer is able to include the required disclosures on the methods used to prepare its sustainability-related financial disclosures, and is able to prepare its disclosures on a consistent and comparable basis between reporting periods. Adopting this approach will also support readiness for future assurance. 

For Scope 3 greenhouse gas emissions, an entity is asked under IFRS S2 to consider its entire value chain (upstream and downstream), including all of the 15 categories of emissions set out in the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011). As not all Scope 3 categories will be relevant to each organisation, the entity should disclose the categories that are included with its measurement, apply a prioritisation approach to determine the most appropriate measurement approach for each applicable category.

To address gaps, organisations may make use of the Scope 3 measurement framework outlined in IFRS S2, which outlines how report preparers should address issues, such as data availability, the use of estimates, calculation methodologies and other sources of uncertainty. Under IFRS S2, the transition reliefs do not require Scope 3 data to be provided in the first annual reporting period in which the standard is applied. In Year 2, companies are expected to begin reporting Scope 3 data, but are exempt from providing comparative information (i.e. the previous year’s figures) until Year 3.

Where it has been determined that estimating Scope 3 emissions is impracticable (i.e. after every reasonable effort has been made), the company should instead disclose how it is managing its Scope 3 emissions. Recognising that Scope 3 data can be difficult to obtain, companies are also only required to provide “reasonable and supportable information that is available to the entity at the reporting date without undue cost or effort”, and it is acceptable to use secondary or qualitative data where primary information cannot be obtained. Companies should however clearly disclose all methods and assumptions used to address data gaps.

IFRS Educational Material: Greenhouse Gas Emissions Disclosure requirements applying IFRS S2 Climate‑related Disclosures (2025) also provides further guidance on this topic.

Under the ISSB’s approach, materiality is defined through a financial lens, focusing on the information needs of the "primary users" of financial reports - namely investors, lenders, and other creditors. According to IFRS S1 (Paragraph 18) information is material if: “Misstating or obscuring that information could reasonably be expected to influence decisions that primary users of general purpose financial reports make on the basis of those reports.”

It should also be noted that materiality under IFRS S1 applies to information, and not directly to sustainability-related risks and opportunities. This is aligned with the materiality definition used in IFRS Account Standards (IAS 1.7), supporting consistency across financial and sustainability reporting. In applying this approach, preparers consider the entity’s specific circumstances when assessing which sustainability-related risks and opportunities could affect cash flows, access to finance or cost of capital, and then determine what information about those matters is material to primary users.

In this context, preparers should consider both the characteristics of their investors and the company’s own circumstances in order to identify which sustainability-related risks and opportunities investors would expect to affect the company’s prospects, and then what material information they need to provide about those risks and opportunities for investors to base their decisions on.

Refer to IFRS Educational Material: Sustainability-related risks and opportunities and the disclosure of material information for further guidance on this topic.

Under IFRS S1, reporting is required only of information that is identified as material, relating to sustainability-related risks and opportunities. To help organisations identify material information, IFRS S1 requires that an entity refer to and consider the applicability of the disclosure topics in the SASB Standards to identify sustainability-related risks and opportunities that could reasonably be expected to affect the entity’s prospects. However, an entity might conclude that a disclosure topic in the SASB Standards is not applicable in the entity’s circumstances. In that case, the entity would not be required to include sustainability-related financial information that reflects the metrics specified in the disclosure topic in its general purpose financial reports.

Material information on sustainability-related risks and opportunities must be included in general purpose financial reports. IFRS S1 Paragraph 60 specifies that “An entity is required to provide disclosures required by IFRS Sustainability Disclosure Standards as part of its general purpose financial reports”. General purpose financial reports are defined as those through which the entity provides disclosures to primary users (i.e. investors), and include both the entity’s financial statements and its sustainability-related financial disclosures.

Under Paragraph 63 of IFRS, organisations may also include sustainability-related financial disclosures within the general purpose report by cross-reference to another report published by the entity. The exact location of disclosures within general purpose financial reports is not prescribed by the ISSB standards, and is subject to the regulations and requirements applicable to the company within its jurisdiction. 

While companies are expected to use scenario analysis using IFRS S2, the standard does not mandate a specific methodology and companies are instead expected to select appropriate methodologies aligned to their circumstances. IFRS S2 (Paragraph 22) states that “the entity shall use climate-related scenario analysis to assess its climate resilience using an approach that is commensurate with the entity’s circumstances”. Organisations are required to disclose the entity’s assessments of its climate resilience at the reporting date, and how and when the climate-related scenario analysis was carried out, including the inputs used in the analysis,  the key assumptions made and time horizons used.

In selecting their scenario analysis methodologies, companies may consider starting with qualitative methodologies, before progressing towards quantitative modelling approaches, as maturity progresses. This allows more detailed analysis efforts to be focused on priority climate-related risks and opportunities identified through initial qualitative assessments. When selecting scenarios, companies are encouraged to consider a diverse range of scenarios, including a climate-related scenario aligned with the latest international agreement on climate change. They should also consider the applicability of the scenarios utilised to physical and transition-related risk and opportunity types respectively.

There are a number of publicly available climate-related scenarios companies may use to inform their assessments, including those produced by NGFS, IPCC and IEA. Various tools have also been developed to assist companies in applying these scenarios, for example the Sector Strategies of the Mission Possible Partnership, Climate Change Knowledge Portal of the World Bank Group and Climate Scenario Catalogue produced by WBCSD and Vivid Economics.

IFRS S2 is focused on climate-related disclosures, and therefore requires entities to disclose information about their climate-related physical and transition risks and opportunities. It does not therefore broadly include all “nature-related” risks, unless those risks are directly caused by or linked to climate-related risks.

However, IFRS S1 requires disclosure of information that is financially material, relating to sustainability-related risks and opportunities, which would include information on nature and biodiversity-related risks, if this information is deemed material to your company. To support the assessment and disclosure of risk types beyond climate, organisations are required to refer to or consider the SASB Standards. They may also choose to make use of industry-based guidance, which may include the CDSB Framework Application Guidance for Water-related Disclosures, CDSB Framework Application Guidance for Biodiversity-related Disclosures. They may also choose to make use of  IFRS Educational Material: Sustainability-related risks and opportunities and the disclosure of material information.

The ongoing ISSB Nature-related Disclosure project is currently in the process of standard-setting on nature-related risks and opportunities. An exposure draft of disclosure requirements, which will supplement IFRS S1 and IFRS S2, is expected to be made available in the second half of 2026.

In accordance with IFRS S2 (Paragraph 10), for each climate-related risk or opportunity that the entity has identified, the time horizons - short, medium or long term - over which the effects of the risk or opportunity could reasonably be expected to occur should be specified. The entity is also asked to explain how it “defines ‘short term’, ‘medium term’ and ‘long term’ and how these definitions are linked to the planning horizons used by the entity for strategic decision-making”.

Therefore, there is no set time horizon that should be used; instead organisations should consider and define the time horizons that are appropriate for its analysis. This will include consideration of a range of factors, for example the typical financial planning horizon used by the organisation, the norms of its sector, the lifespan of its assets, the type of climate-related risks or opportunities it wishes to assess, and the assessment periods of its investors. Companies shall clearly define the time horizons that have been used in the climate-related scenario analysis as part of the description of the methods, inputs and assumptions included in its sustainability-related financial disclosures.

Under IFRS S2, organisations are not mandated to create a transition plan, but if they do have a transition plan they are required to disclose details about the plan, including information about key assumptions used in developing it. IFRS S2 defines a transition plan as “An aspect of an entity’s overall strategy that lays out the entity’s targets, actions or resources for its transition towards a lower-carbon economy, including actions such as reducing its greenhouse gas emissions”.

To support entities in making disclosures about transition plans, in June 2025 the IFRS Foundation released the guidance Disclosing information about an entity’s climate-related transition, including information about transition plans, in accordance with IFRS S2. The UN SSE Model Guidance on Climate Transition Plans (2025) can also be used to guide internal efforts to develop a transition plan.

It should also be noted that certain jurisdictions have, or are in the process of, developing jurisdiction-specific guidance or requirements on transition planning. The International Transition Plan Network (ITPN) provides an overview of Global Transition Plan Requirements. Organisations may also wish to consult with their local regulator or standard-setter.

Under IFRS S2, there is no single “prescribed” method or specific formula for calculating an internal carbon price. Instead, the standard requires transparency on whether and how companies have developed any carbon price they are using, and how this is being applied. As part of the climate-related metrics content area, entities are required to disclose “an explanation of whether and how the entity is applying a carbon price in decision-making (for example, investment decisions, transfer pricing and scenario analysis)” and “the price for each metric tonne of greenhouse gas emissions the entity uses to assess the costs of its greenhouse gas emissions”.

For companies seeking to develop an internal carbon price, they should consider a range of applicable external methods and guidance, to develop a pricing approach applicable to its context and use case, including that of WBCSD and CDP.

Reporting under IFRS S1 and IFRS S2 is not automatically mandatory globally. Its mandatory status depends on the adoption of the standards by individual national or regional jurisdictions. Early application of the standards is permitted, but requires application of IFRS S1 and IFRS S2 at the same time (IFRS S1.E1). The IFRS publishes jurisdictional adoption profiles, providing profiles which summarise each jurisdiction’s adoption approach.

While the standards were effective from January 1, 2024, implementation is determined by local regulatory adoption and applicable transitional reliefs or phasing in of requirements that have been selected. Refer to FAQ [18] for further detail on the ISSB transition reliefs. Report preparers are encouraged to check with their local regulator for current or expected requirements in their jurisdiction and their implementation timelines.

Companies may also choose to apply the ISSB Standards on a voluntary basis in the absence of regulatory requirements. The IFRS guidance Voluntarily applying ISSB Standards—A guide for preparers (2024) can be used to support this. Report preparers should also be aware that a statement of compliance with the ISSB Standards is only permitted where all requirements are met (IFRS S1.72), including when using transition reliefs in the standard.

To support companies as they transition to the new global baseline, the ISSB has built several transition reliefs directly into IFRS S1 and S2. These reliefs are available to all entities globally in their first year of application:

• Climate-First Reporting: In the first year of adoption, companies can choose to disclose only their climate-related risks and opportunities (IFRS S2), delaying reporting on other sustainability topics (IFRS S1) until the second year.
• Scope 3 GHG Emissions Relief: Entities are exempt from disclosing their Scope 3 greenhouse gas emissions in the first annual reporting period, providing an additional 12 months to establish value chain data processes.
• Reporting Timing Relief: In the first year, sustainability disclosures do not have to be published simultaneously with the annual financial statements; they can be released later, such as with the following half-year interim report.
• Comparative Information Relief: Companies are not required to provide comparative information (data from the prior year) in their first annual reporting period under the standards.
• GHG Measurement Method Relief: If a company used a different measurement method (other than the GHG Protocol) in the year immediately preceding adoption, it may continue using that method for the first year.
• Proportionality Reliefs: Companies can use qualitative rather than quantitative data for financial effects and scenario analysis if they lack the necessary skills or resources, provided they u se all "reasonable and supportable information" available without undue cost or effort.

However, their local availability depends on whether the applicable regulator adopts the standards in their entirety or sets their own local phase-in rules. Companies are therefore advised to refer to their local reporting requirements, or consult with their regulator, for further guidance on which transition reliefs may be applicable in their jurisdiction.

Local translations of the ISSB standards are managed by local regulators and/or standard-setters, therefore companies should check with the relevant authorities in their jurisdiction for information on the availability of translations of the standards and accompanying guidance. While translations are helpful, the English text of the IFRS standards is the authoritative version. 

The ISSB set a global effective date for the standards of 1 January 2024, which remains the same regardless of when a local translation is completed. While the ISSB global effective date is fixed, local mandatory adoption may depend on the availability of translated standards, therefore companies should consult with their local regulator and/or standard setter to determine the mandatory reporting date(s) applicable in their jurisdiction.

The ISSB standards are designed such that any company can apply them on a voluntary basis. The standards do not specifically include any “exemptions” for SMEs, but the proportionality mechanisms built into the standards can support SMEs to apply the standards in a way that is commensurate with their skills, resources and capabilities. For example, under IFRS S1 the entity is expected to use “all reasonable and supporting information that is available to it at the reporting date, subject to that information being available without undue cost or effort” when assessing its value chain, and identifying its sustainability-related risks and opportunities.

Implementation is determined by local regulatory adoption and applicable transitional reliefs or phasing in of requirements that have been selected. Report preparers are encouraged to check with their local regulator for current or expected requirements in their jurisdiction and their implementation timelines, which may provide specific phase-in or transitional reliefs designed to support SMEs in their adoption of the standards.

For wider guidance on sustainability business practices by SMEs, including reporting, organisations may also refer to the UN SSE Model guidance for SMEs to integrate sustainable business practices (2025).

Under IFRS S1 (Appendix E) transition reliefs are provided in relation to comparative information, which include the fact that entities are not required to disclose comparative information in the first annual reporting period in which they apply the standards. The data of initial application of the standards by the company is defined in IFRS S1.E2. Companies are advised to refer to their local reporting requirements, or consult with their regulator, for further guidance on which transition reliefs may be applicable in their jurisdiction.

Under the ISSB Standards, companies should use the same boundary for their sustainability reporting as is used for their financial reporting, to promote interconnectivity and comparability. According to IFRS S1 (paragraph 20), "An entity’s sustainability-related financial disclosures shall be for the same reporting entity as the related financial statements." This promotes interconnectivity between sustainability-related risks and opportunities and the activities and assets described in the financial statements. Therefore, companies should disclose material information about sustainability-related risks and opportunities for all entities and subsidiaries that are consolidated in their financial statements. However, companies should also look beyond the reporting entity, throughout their value chain, to identify sustainability-related risks and opportunities that could affect the reporting entity.

For the reporting of greenhouse emissions (GHG) under IFRS S2, there are some further specific considerations relating to boundary setting. An entity is required to use the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004) for the measurement of its greenhouse gas emissions (except where any requirements would conflict with IFRS S2, or where local reporting requirements stipulate the use of a different method for measuring its greenhouse gas emissions). The GHG Protocol Corporate Accounting and Reporting Standard requires entities to measure its emissions using either an equity share (according to its share of equity in an operation) or control approach (accounting for 100% of activities over which it has either operational or financial control). Refer to Chapter 3, Setting Organizational Boundaries, of the GHG Protocol Corporate Account and Reporting Standard for further details on these two approaches. 

It should be noted that the terms “reporting entity”, in the ISSB Standards and “organisational boundary” in accordance with the GHG Protocol Corporate Accounting and Reporting Standard (2024) serve distinct but separate purposes. The determination of the organisational boundary, as required by the Greenhouse Gas Protocol, is used specifically for the purposes of measuring the greenhouse gas emissions of the reporting entity.

IFRS Educational Material: Greenhouse Gas Emissions Disclosure requirements applying IFRS S2 Climate‑related Disclosures (2025) also provides further guidance on this topic and [FAQ 7] also provides further information on the disclosure of Scope 3 GHG emission.

IFRS S1 acknowledges that sustainability-related risks and opportunities can arise throughout a company’s value chain, and therefore requires disclosures on the current and anticipated effects of sustainability-related risks and opportunities that arise throughout the value chain. IFRS S1 specifies that the value chain encompasses “the entity’s operations… those along its supply, marketing and distribution channels”. Therefore, to support a complete understanding of an organisation’s sustainability-related risks and opportunities, data should be collected from relevant upstream and downstream value chain partners.

Companies are required to use “all reasonable and supportable information that is available to the entity at the reporting date without undue cost or effort” (IFRS 1 Paragraph B6) to both identify sustainability-related risks and opportunities that could reasonably be expected to affect its prospects, and to determine the scope of its value chain.

Where primary data cannot be obtained, industry averages, or sector-based emissions factors may be used to provide estimates. Where quantitative information cannot be obtained or reliably calculated, a qualitative description of the risks and opportunities associated with those value chain partners is acceptable.

According to IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (paragraph 20), "An entity’s sustainability-related financial disclosures shall be for the same reporting entity as the related financial statements." Therefore, organisations should refer to the reporting perimeters utilised in its consolidated financial statements, including the parent and all consolidated subsidiaries. 

For associates and joint ventures that are typically accounted for using the equity method in financial statements, the ISSB standards generally require that you report information on the risks and opportunities arising from those interests that is material to the reporting entity’s prospects, aligned to the ISSB’s definition of materiality (see FAQ [8]).

Obtaining high-quality data from non-consolidated entities (where you may have less control) can be challenging. Therefore organisations may consider the proportionality mechanisms allowing the use of all "reasonable and supportable information available at the reporting date without undue cost or effort”. For example, if direct measurement is impossible from a joint venture partner, the use of reasonable estimates or secondary data (proxies) is permitted, provided the assumptions and measurement uncertainty are disclosed. 

See also [FAQ 27] on determining the reporting boundary for sustainability-related disclosures.

Companies should typically refer to their primary jurisdiction, i.e. the one where the company, or its parent company, is listed or domiciled and subject to its primary regulatory oversight for financial reporting. For a company with multinational operations, this means that the sustainability reporting boundary must be consistent with the financial reporting boundary. 

Where companies have a dual listing, the reporting approach depends on which jurisdictions have formally adopted the ISSB standards. The ISSB’s "Global Baseline" is designed specifically to solve the "duplicate reporting" problem for dual-listed companies by emphasizing interoperability.

While the ISSB standards provide a "global baseline," the decision to mandate them is a sovereign decision made by each individual country. Given the diverse range of governance and legal structures multinational companies may possess, they are advised to consult with their legal and regulatory departments to ensure all applicable reporting requirements are identified and complied with.

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