IFRS S2 is not automatically mandatory globally but becomes mandatory only when adopted by local jurisdictions or regulators. While effective from January 1, 2024, its application depends on national endorsement. Many countries are in the process of adopting these standards, making them a key upcoming requirement.
IFRS S1 and IFRS S2 become mandatory when regulators in jurisdictions integrate them into financial reporting frameworks and regulatory requirements.
All companies can start applying IFRS S1/S2 now, which became effective for annual reporting as of January 1, 2024. IFRS S1/S2 will become mandatory when and if regulators integrate them into financial reporting frameworks and regulatory requirements.
In 2025, ESG reporting is shifting from voluntary to mandatory in many regions. New regulations in the EU, US, and UK require companies to publish environmental and social performance data alongside financial results.
The objective of IFRS S2 is to require an entity to disclose information about its climate-related risks and opportunities that is useful to users of general purpose financial reports in making decisions relating to providing resources to the entity.
IFRS S1 sets out general requirements for the disclosure of material information about all material sustainability- related financial risks and opportunities and other general reporting requirements. IFRS S2 sets out disclosures that are specific to climate-related matters.
While IFRS compliance is not mandatory for all companies, certain entities are required to follow Ind-AS, including: Listed companies. Unlisted companies with a net worth of Rs. 250 crore or more.
In Canada, the financial sector is facing increasing pressure to meet mandatory Environmental, Social, and Governance (ESG) reporting requirements. With new regulations implemented in 2024, companies must ensure their ESG strategies are both transparent and actionable.
At the midpoint of 2025, the ESG landscape continues to evolve amid rising political rhetoric and regulatory change. While some believe that ESG is losing momentum, the reality is that the business case for ESG remains strong.
Territories and Countries with Mandatory ESG Reporting
Is IFRS mandatory in Canada? Since 2011, all publicly accountable enterprises in Canada, including companies listed on the Toronto Stock Exchange, Canadian Securities Exchange, and other Canadian exchanges, have been required to use IFRS to prepare their financial statements.
Under Chapter 2M of the Corporations Act (Ch 2M), entities that are required to prepare an annual financial report under Ch 2M for a financial year, and meet one of the sustainability reporting thresholds in s292A, are required to prepare a sustainability report.
The first two IFRS Sustainability Standards were issued on June 26, 2023, by the ISSB, with an effective start date of January 1, 2024: IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information. IFRS S2: Climate-related Disclosures.
Use of IFRS instead became mandatory for group accounts of EU listed companies from 2005. It has been the basis of large-company financial statements audited in the UK since then.
IFRS S1: prescribes how a company prepares and reports its sustainability-related financial disclosures. IFRS S2: sets out supplementary requirements that relate specifically to climate-related risks and opportunities.
The benefits of voluntary sustainability reports are the positive perception of shareholders and increased concern for the company's sustainability. Mandatory sustainability reports can still provide some (though not all) of the same benefits as voluntary sustainability reports.
TL;DR: In 2025, ESG reporting has shifted from voluntary to mandatory across most major economies, requiring large enterprises to disclose standardized, auditable data on environmental, social, and governance performance.
The past 11 years have been the 11 warmest on record. Global temperatures from the past three years (2023-2025) averaged more than 1.5°C above the pre-industrial level (1850–1900). This marks the first time a three-year period has exceeded the 1.5°C limit.
Corporate Sustainability Roles
After studying ESG, you can pursue roles such as Sustainability Analyst, ESG Manager, or Corporate Social Responsibility (CSR) Officer.
“ESG is the devil,” wrote Musk on Wednesday in response to a report published in the Washington Free Beacon. The article cited Tesla's poor score upon reentering the S&P 500 sustainability index, receiving only 37 out of a maximum 100 points, versus the 84 achieved by cigarette merchant Philip Morris International.
In India, ESG disclosure has been formalized through the Securities and Exchange Board of India (SEBI)'s Business Responsibility and Sustainability Reporting (BRSR) framework, making it mandatory for the top 1000 listed companies by market capitalization from FY 2022-23.
However, environmental, economic, social, and human sustainability focuses on preserving future generations and improving the quality of life. We're exploring the link between these pillars and climate change, and how effectively incorporating them into our processes can help combat the climate crisis.
The corporate tax law in the UAE requires companies to align their financial reports with IFRS. It is mandatory for tax compliance. In fact, it is a prerequisite for corporate tax calculation and report submission. Companies that meet this requirement avoid the risk of costly penalties and fines by the tax authorities.
The U.S., China, Egypt, Bolivia, Guinea-Bissau, Macao and Niger don't allow their domestic publicly traded companies to use International Financial Reporting Standards.
The four pillars of IFRS S1 and S2 are governance, strategy, risk management and metrics and targets.