IFRS S2 (Climate-related Disclosures) is not universally mandatory but is increasingly required by specific jurisdictions for annual reporting periods beginning on or after January 1, 2024. While voluntary in some regions, it is being adopted by major markets like Australia, Canada, the UK, and Brazil, and it aligns with California's SB 261.
The former conservative government announced that they would make IFRS S1 and S2 reporting mandatory with amendments to IFRS S1 and S2 for UK specific requirements. The exposure drafts of UK SRS are therefore very similar to the IFRS S1 and S2 save for certain amendments.
Who needs to comply with IFRS S1 and IFRS S2? IFRS S1 and S2 apply to companies that operate in jurisdictions where these standards are adopted either as mandatory requirements or as the recommended reporting baseline.
IFRS S2 — Climate-related Disclosures. IFRS S2 sets out the requirements for identifying, measuring and disclosing information about climate-related risks and opportunities that is useful to primary users of general purpose financial reports in making decisions relating to providing resources to the entity.
This guidance no longer mandates reporting against all GGC25-30 metrics, targets and commitments. However, where organisations consider these or other related sustainability-related KPIs to be material – by value or nature -they shall report them in their annual report.
The standards are currently voluntary. Canada's provincial and territorial regulators and legislators will determine whether CSDS 1 and CSDS 2 should be mandated, and if so, who will need to apply the standards and over what time frame.
The requirements for detailed CSRD reporting now apply in full for Wave 1 companies — i.e., large listed companies, banks, and insurance companies with more than 500 employees — starting from financial year 2024. The first reports under the new standard were therefore submitted in 2025 (1).
The IFRS S1 and S2 are investor focused as they are designed to provide substantial information, to help investors make better investment decisions. As entities adopt S1 and S2 for disclosures, knowing the pulse of investors regarding sustainability governance is crucial.
They classify emissions by source: direct (Scope 1), purchased energy (Scope 2), and value chain (Scope 3). Is the GHG Protocol mandatory? No — but it is referenced or required by many regulatory frameworks globally.
IFRS S2 is effective for annual reporting periods beginning on or after 1 January 2024 with earlier application permitted as long as IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information is also applied.
The IFRS Sustainability Standards as issued by the ISSB are not yet mandatory in Canada. However, the Canadian Sustainability Standards Board (CSSB) issued their inaugural Canadian Sustainability Disclosure Standards (CSDS), based on the IFRS Sustainability Standards, on March 13, 2024.
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.
IFRS S2 Climate-related Disclosures requires an entity to disclose information about climate‑related risks and opportunities that could reasonably be expected to affect its cash flows, access to finance or cost of capital over the short, medium or long term.
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.
The international financial reporting standards (“IFRS”) are the standards applicable to companies who do not apply a local GAAP. These mostly tend to be international companies. IFRS is mandatory for listed companies, but for all other UK companies there is a choice between IFRS and UK GAAP.
Are GHG accounting and corporate emissions disclosures mandatory? GHG reporting is mandatory for some companies, depending on where they do business. In the past few years, GHG reporting has been integrated into law in many areas of the world.
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.
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.
A company is required to apply IFRS S1 and IFRS S2 together but paragraph E5 of IFRS S1 allows a company, in its first year of applying ISSB Standards, to disclose information on only its climate-related risks and opportunities (in accordance with IFRS S2)—the so-called 'climate-first' approach: In the first annual ...
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.
It has announced its intention to develop UK-specific sustainability reporting standards in line with the ISSB standards by Q1 2025. Requirements are anticipated to be effective from 2026 at the earliest.
The "Big 4" in ESG standards generally refers to the leading, complementary frameworks: GRI (Global Reporting Initiative) for broad stakeholder impact, SASB (Sustainability Accounting Standards Board) for investor-focused financial materiality, TCFD (Task Force on Climate-related Financial Disclosures) for climate risks, and CDP (formerly Carbon Disclosure Project) for environmental performance disclosure, often used together for comprehensive reporting, with newer ISSB standards gaining prominence.
ESG reporting is an organization's public disclosure of its environmental, social, and corporate governance data, hence the ESG.