ISSB’s IFRS S1 and S2

What is IFRS S1 and S2?

International Financial Reporting Standards (IFRS) S1 and S2 are a set of global sustainability reporting standards introduced by the International Sustainability Standards Board (ISSB) in June 2023.

  • IFRS S1 outlines the general requirements for disclosing sustainability-related risks and opportunities that impact an organisation’s enterprise value.. It ensures companies provide a comprehensive view of how sustainability factors affect their financial position and performance.
  • IFRS S2 focuses specifically on climate-related disclosures, aligning with the framework set by the Task Force on Climate-Related Financial Disclosures (TCFD). It highlights the importance of transparency around risks, opportunities, and impacts tied to climate change.

Together, these standards enable businesses to deliver useful information to investors and stakeholders, fostering trust and accountability in the shift towards sustainable growth.

Who is impacted by IFRS S1 and S2?

The adoption of IFRS S1 and S2 has widespread implications for organisations across various sectors. Businesses most affected include:

  • Large listed companies required to disclose their sustainability impacts and climate-related risks.
  • Organisations with complex supply chains navigating sustainability metrics and accountability.
  • Investors and financial institutions, which need clear insights into the sustainability practices of their portfolio companies.
  • Global entities operating in jurisdictions adopting these standards.

If your organisation reports under IFRS or has stakeholders seeking non-financial disclosures, you could be directly impacted by these changes if these standards are being adopted by the governing body in your jurisdiction.

What actions should businesses impacted by IFRS S1 and S2 take now?

Preparing for IFRS S1 and S2 adoption starts with strategic planning and organisation-wide alignment. Here’s how you can begin today:

  1. Assess your current reporting framework: Understand the gap between your existing disclosures and the requirements of IFRS S1 and S2.
  2. Assess materiality using an enterprise value lens: IFRS S1 and S2 require disclosures that could reasonably affect the organisation’s enterprise value, including risks and opportunities.
  3. Gather accurate data: Strengthen systems to collect, validate, and report sustainability and climate-related data.
  4. Engage stakeholders: Collaborate across teams to integrate sustainability impacts into overall business strategies.
  5. Seek expert guidance: Work with specialists to ensure alignment with these new standards, minimising disruptions to operations.

Early action not only ensures compliance but also enhances your organisation’s credibility and appeal to investors.

Get IFRS S1 and S2 ready with RSM

At RSM, we understand the complexities of transitioning to IFRS S1 and S2 standards. Our dedicated team of specialists is ready to provide tailored support, helping your business adapt seamlessly.

Our expertise includes:

  • Gap analysis: Evaluate your current reporting against IFRS S1 and S2 standards to identify key improvement areas.
  • Materiality assessment: Determining what is material to your organisation under IFRS S2 and S2 to ensure credible and decision-useful disclosures.
  • Data strategy and implementation: Build robust frameworks for sustainability data collection, verification, and reporting.
  • Stakeholder engagement: Develop strategies to communicate sustainability performance effectively to stakeholders.
  • Compliance training: Empower your teams with the knowledge needed to maintain ongoing compliance.
  • End-to-end reporting support: From policy development to final disclosures, we’re with you every step of the way.

Why choose RSM?

Global reach, local expertise: Seamlessly integrate IFRS S1 and S2 changes, backed by specialists in over 120 countries.

Customised solutions: Our advisors tailor strategies to your organisation’s unique needs.

Proven track record: We’ve helped businesses of all sizes achieve compliance while driving value through sustainability transformation.

Frequently Asked Questions

IFRS S1 focuses on providing a comprehensive framework for general sustainability disclosures, while IFRS S2 zeroes in on climate-related disclosures. Together, these standards aim to enhance transparency and comparability in sustainability reporting.

These standards apply to companies that prepare financial statements under IFRS Standards. Publicly listed businesses and those in industries with significant sustainability and climate-related impacts are most directly affected.

While adoption depends on jurisdiction, many regulators are incorporating these standards into mandatory reporting requirements for larger or publicly listed entities.

The effective date may vary by region, but businesses are encouraged to start preparing as soon as possible to align with implementation timelines and meet stakeholder expectations.

  • Conduct a gap analysis to identify current reporting gaps.
  • Upgrade data collection and reporting processes.
  • Train employees on the new requirements.
  • Leverage RSM’s expertise and tools for seamless integration.

Non-compliance can result in regulatory penalties, reputational damage, and reduced investor confidence, making preparation essential.

These standards aim to consolidate global reporting by building on existing frameworks like TCFD, SASB, and CDSB. They do not replace broader sustainability frameworks like GRI or ESRS, which may still be required by regulators or stakeholders in parallel.

IFRS S2 requires detailed disclosure on climate-related risks and opportunities, their impact on the business, and how these are managed and measured.

Absolutely. Beyond compliance, these standards can enhance operational transparency, attract sustainability-focused investors, and improve long-term risk management.

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