IFRS S1 and S2 (effective Jan 1, 2024) are mandatory for companies mandated by local jurisdictions to adopt ISSB standards, primarily targeting large, publicly accountable, or cross-border entities. They are designed for companies needing to disclose material sustainability and climate-related risks and opportunities in general-purpose financial reports.
IFRS S1 and IFRS S2 become mandatory when regulators in jurisdictions integrate them into financial reporting frameworks and regulatory requirements.
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.
Financial statements in accordance with IFRS must be prepared by:
The overall responsibility for the sustainability report, which forms part of the management report, lies with the Management Board. It has a duty to ensure that the report complies with legal requirements and reflects the company's strategic priorities.
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).
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.
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.
Standard IFRS requirements
It has not yet been adopted as an official system in the United States. However, any company that does a large amount of international business may need to use IFRS reporting on its financial disclosures in addition to GAAP.
IFRS S1 applies to all businesses that prepare general purpose financial reports, regardless of the accounting framework used, including those following International Financial Reporting Standards (IFRS), generally accepted accounting principles (GAAP), or other local reporting standards.
What are the four pillars of IFRS S1 and S2? The four pillars of IFRS S1 and S2 are governance, strategy, risk management and metrics and targets.
Under IFRS S1, the reporting boundary is closely aligned with the financial statements, meaning only those entities within the financial reporting group are included in the sustainability report.
IFRS S1 requires an entity to disclose information about all sustainability-related risks and opportunities that could reasonably be expected to affect the entity's cash flows, its access to finance or cost of capital over the short, medium or long term (collectively referred to as 'sustainability-related risks and ...
Current status of ESG reporting mandates in the U.S.
ESG reporting in the U.S. currently combines voluntary guidelines with emerging mandatory regulations. While a comprehensive federal mandate is still under development, state-level regulations are increasingly shaping the reporting landscape.
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.
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.
International Financial Reporting Standards (IFRS) are the international standards issued by the International Accounting Standards Board (IASB).
IFRSs are required for Government-owned enterprises, newly privatised companies (large taxpayers, or 'LTOs'), banks, and insurance companies. IFRSs required in both consolidated and separate financial statements of financial institutions.
IFRS S1 sets the general standard for disclosing sustainability-related risks and opportunities. IFRS S2 focuses specifically on climate-related risks, including both physical and transition risks.
The information contained in the sustainability report contributes to provide insight into the sustainability risks and opportunities of the undertaking. It is intended primarily for financial stakeholders, such as shareholders, banks, creditors, and other financiers.
IFRS S1 is a set of disclosure requirements designed to enable companies to communicate the sustainability risks and opportunities they anticipate facing over the short-, medium-, and long-term. IFRS S2 is designed to be used in conjunction with IFRS S1 and sets out specific climate-related disclosures.
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 five key documents include your profit and loss statement, balance sheet, cash-flow statement, tax return, and aging reports.
The four main types of Corporate Social Responsibility (CSR) are Environmental, Ethical, Philanthropic, and Economic responsibilities, forming a framework for businesses to operate sustainably and contribute positively to society by focusing on planet, people, and profit. These pillars guide companies in reducing their ecological footprint, acting fairly, giving back to the community, and ensuring profitability while maintaining social good.