If you're managing sustainability reporting for a multinational company — or any organization with global investors — you need to understand what IFRS S1 and S2 standards mean for you. The good news? These standards build on frameworks you likely already know (hello, TCFD and SASB).The challenge? Figuring out how they fit into your existing reporting ecosystem.
Let's break down what you actually need to know about ISSB standards.
The IFRS Sustainability Disclosure Standards are a set of globally consistent baseline requirements for sustainability-related financial disclosures. Created by the International Sustainability Standards Board (ISSB), they're designed to help companies provide decision-useful information to investors about sustainability risks and opportunities that could affect enterprise value.
Think of them as the sustainability equivalent of IFRS accounting standards — creating a common language for sustainability disclosure that works across borders and capital markets. Disclosures are more like what’s currently found in a 10-k and less like the sustainability case studies and storytelling narratives typically found in reports or on websites.
Currently, there are two standards:
IFRS S1 is the foundational standard. It establishes the architecture for sustainability disclosure overall — requiring companies to report on any sustainability-related risks and opportunities that could reasonably affect their cash flows, access to financing, or cost of capital over the short, medium, or long term.
IFRS S2 applies that architecture specifically to climate risks and opportunities. It's more prescriptive, requiring detailed disclosures about climate risks, climate-related opportunities, greenhouse gas emissions (including Scope 1, 2, and 3), and climate scenario analysis. S2, in particular, builds on the TCFD disclosures that many companies have prepared for upcoming California Climate Change Accountability Package requirements, which are due by January 1, 2026.
S1 is applied to all risks and opportunities. S2 follows a similar approach but only on climate risks and opportunities. Most companies will need to apply both standards together, however, the standards allow for a “climate first” approach for companies in their first year of reporting. Subsequent reports should apply both S1 and S2.
The ISSB was created by the IFRS Foundation (the same organization behind international accounting standards) in response to demand from investors and regulators for consistent, comparable sustainability information. The ISSB launched in 2021 and published its first two standards in June 2023.
Why do they matter? Because the ISSB has institutional credibility that matters. When the same body that oversees global accounting standards creates sustainability disclosure requirements, capital markets pay attention. Multiple jurisdictions are already adopting or building on ISSB standards as their baseline for mandatory climate disclosure.
This isn't another voluntary framework that might fade away. It's becoming regulatory infrastructure.
No, but they're related. Both come from the IFRS Foundation, but they serve different purposes:
The key connection: ISSB standards are designed to complement financial statements, not replace them. They focus on sustainability matters that have financial implications for the company, which is why they're sometimes called "sustainability-related financial disclosures."
It depends on where you operate and where your investors are located. ISSB standards themselves aren't automatically mandatory — individual jurisdictions decide whether to adopt them.
Countries and regions that have adopted or are adopting ISSB standards include:
Even if you're not in a jurisdiction that mandates ISSB standards, you might face investor or competitor pressure to align with them — particularly if you're raising capital internationally or have institutional investors who expect ISSB-aligned disclosure.
As of late 2025, adoption is happening globally but at different speeds:
Already implementing:
Announced adoption or building on ISSB:
Considering or evaluating:
The momentum is clear: ISSB is becoming the global baseline, even in regions that develop their own additional requirements (like the EU with CSRD).
This depends entirely on your jurisdiction and company profile. Most jurisdictions are taking a phased approach:
If you're in the UK, Australia, or Singapore, you need to be preparing now if you're not already reporting. If you're elsewhere, expect 1-3 years of runway — but that time goes quickly when you're building data systems and governance processes from scratch and internal education needs to be built as a company (even a mature reporting company) moves from narrative/GRI style report to IFRS risk and opportunity focused reports.
Yes, you can phase in implementation, and most jurisdictions expect you will. The ISSB itself includes transition relief provisions:
That said, "phased implementation" doesn't mean "slow implementation." If you're starting from scratch, you'll need significant lead time to build data collection systems, establish governance, train teams, and test reporting processes before your first disclosure deadline hits.
This is the million-dollar question for any company operating in or selling in Europe. Here's the key difference:
ISSB (investor-focused): Single materiality — what sustainability risks and opportunities affect your business financially?
CSRD/ESRS (stakeholder-focused): Double materiality — what affects your business AND what impacts does your business have on people and planet?
In practice, CSRD is more comprehensive and demanding than ISSB. If you're complying with CSRD, you're capturing most of what ISSB requires, plus significantly more. However, the reverse isn't true — ISSB compliance doesn't get you to CSRD compliance. That said, one DMA process can be leveraged for both processes.
The good news: there's substantial overlap, particularly on climate disclosure. Many companies are building systems that can feed both frameworks rather than maintaining parallel reporting processes.
If you've been reporting aligned with TCFD (Task Force on Climate-related Financial Disclosures), you're in a good position. IFRS S2 was built directly on the TCFD framework — it uses the same four-pillar structure (Governance, Strategy, Risk Management, Metrics & Targets) and incorporates TCFD recommendations.
The main differences:
Think of TCFD as the foundation and ISSB as the more detailed building code. If you're already TCFD-aligned, you're not starting over — you're adding specificity and rigor to what you're already doing.
The ISSB essentially absorbed SASB. When the ISSB was created, the Sustainability Accounting Standards Board (SASB) and its standards were folded into the new organization.
IFRS S1 explicitly references SASB Standards, stating that companies should refer to SASB's industry-specific disclosure topics when identifying sustainability-related risks and opportunities. The ISSB maintains and will continue developing these industry standards.
So if you're already using SASB Standards for materiality assessment and industry-specific metrics, that work directly supports IFRS compliance. You don't need to choose between them — SASB is now part of the IFRS ecosystem.
Not entirely, but there's significant overlap. The SEC's climate disclosure rules (assuming they survive legal challenges and political headwinds) cover similar territory to IFRS S2, but there are key differences:
If you're preparing for SEC climate rules, you're building much of the infrastructure you'd need for ISSB. But you can't assume SEC compliance automatically equals ISSB compliance — particularly if you're operating in jurisdictions that adopt ISSB standards.
The consequences depend entirely on whether you're in a jurisdiction that has made ISSB standards mandatory — and if so, what enforcement mechanisms exist.
In jurisdictions with mandatory ISSB adoption:
If you're required to comply and don't, you face the same types of consequences as failing to meet other mandatory disclosure requirements:
In jurisdictions without mandatory requirements:
Even where ISSB isn't legally required, non-compliance carries risks:
The bigger risk: inadequate or misleading disclosure
Here's what keeps general counsel up at night: it's not just about whether you disclose, but whether what you disclose is accurate, complete, and not misleading. Companies face increasing litigation risk around sustainability claims, including:
The enforcement landscape around sustainability disclosure is tightening rapidly. Even voluntary disclosure carries legal risk if it's inaccurate or misleading — sometimes more risk than saying nothing at all.
Bottom line: If you're in a jurisdiction that's adopted ISSB standards, treat compliance with the same seriousness as financial reporting requirements. If you're not yet required to comply, consider the market and reputational risks of falling behind investor expectations.
For IFRS S1 (general sustainability):
For IFRS S2 (climate specifically):
The data requirements are substantial, which is why building collection systems early is critical — you can't retrofit this in a month before your disclosure deadline.
Yes — but not in year one. IFRS S2 requires disclosure of all Scope 1, 2, and 3 greenhouse gas emissions, but provides transition relief allowing companies to omit Scope 3 in their first year of reporting.
This phase-in recognizes that Scope 3 measurement is complex and many companies are still building the systems and supplier engagement needed for reliable data. But make no mistake: Scope 3 disclosure is required, just deferred for year one.
Start building your Scope 3 inventory now if you haven't already. Year two comes fast, and Scope 3 typically represents the largest portion of most companies' carbon footprint — meaning it's often the most material information investors want. Even where not legally mandated, institutional investors are increasingly expecting assured sustainability data — particularly greenhouse gas emissions. If you're reporting without assurance, expect questions about data credibility. While there is currently no requirement to have Scope 3 assured (in the IFRS or by individual jurisdictions), it is expected that in time there will be a requirement to assure Scope 3 with limited assurance.
This phrase is the key to understanding what ISSB standards actually require. It means: sustainability information that could reasonably be expected to influence the decisions investors make about providing resources to your company.
This isn't about your impact on the world (that's CSRD territory). It's about how sustainability matters could affect your:
So when you're assessing what to disclose under ISSB standards, the question isn't "what are all our sustainability impacts?" It's "which sustainability matters have financial implications for our business?" This is what "investor-focused" means in practice.
IFRS S2 requires you to disclose climate-related scenario analysis that:
The standard doesn't prescribe exactly how to conduct scenario analysis — you have flexibility in methodology. But disclosure needs to be specific enough that investors can understand:
Generic boilerplate won't cut it. Investors want to see that you've genuinely stress-tested your business model against different climate futures, not just checked a compliance box.
IFRS uses an investor-focused definition: Information is material if omitting, misstating, or obscuring it could reasonably be expected to influence decisions that primary users (investors, lenders, and creditors) make on the basis of financial statements and sustainability-related financial disclosures.
This is single materiality — focused on what affects the company financially. This differs significantly from:
In practice, ISSB materiality focuses your disclosure on sustainability matters that could impact enterprise value, cash flows, access to finance, or cost of capital. Issues may be material even if financial effects aren't fully quantifiable or won't manifest for several years — the question is whether they're reasonably likely to influence investor decisions.
IFRS S1 requires disclosure of all sustainability-related risks and opportunities that could affect enterprise value. This wholly depends on the results of the company’s materiality assessment. It could include (but isn't limited to) topics such as:
Not only does the topic need to be disclosed, but the specific risk or opportunity relating to that topic, for example for water resources, the risk of water stress in upstream supplier facilities due to warm temperatures. The ISSB expects you to reference SASB industry standards when identifying which topics are likely material for your sector. For example, water management is highly material for beverage companies but less so for software companies.
Just material ones — as defined by investor-focused materiality. This is actually a significant difference from CSRD, which requires reporting on a much broader set of risks regardless of whether they're deemed material.
Under ISSB, you conduct a materiality assessment to identify which sustainability-related risks and opportunities could reasonably affect your enterprise value. You then disclose information about those material topics using the four-pillar structure (Governance, Strategy, Risk Management, Metrics & Targets).
Topics you determine to be immaterial don't require disclosure. However, you should document your materiality assessment process, because investors or regulators may want to understand how you reached materiality conclusions — particularly for topics commonly viewed as material in your industry.
The ISSB standards themselves don't mandate assurance — that decision is left to individual jurisdictions adopting the standards. However, the direction of travel is clear: assurance is increasingly expected and becoming required in major markets.
Examples:
Even where not legally mandated, institutional investors are increasingly expecting assured sustainability data — particularly greenhouse gas emissions. If you're reporting without assurance, expect questions about data credibility.
Most jurisdictions implementing ISSB standards are taking a phased approach:
Phase 1: Limited assurance (similar to a review engagement)
Phase 2 (typically 2-3 years later): Reasonable assurance (similar to a financial audit)
Limited assurance is where most companies start, but plan for reasonable assurance as the eventual destination. Building data controls and documentation now makes the transition to higher assurance levels smoother.
Yes, where possible — and increasingly, this integration is becoming necessary rather than optional. Here's why:
Efficiency: Sustainability and financial information are interconnected. Auditors reviewing capital allocation decisions need to understand climate transition plans. Sustainability teams need financial data about capital expenditures and investments.
Credibility: When sustainability disclosure sits alongside financial reporting and undergoes similar assurance processes, it signals that you treat this information with equivalent rigor.
Regulatory direction: Many jurisdictions are moving toward integrated financial and sustainability reporting, with the same auditor providing assurance on both.
Practical reality: ISSB standards require you to explain financial implications of sustainability matters—which means your sustainability and finance teams need to work together closely anyway.
Many companies are finding that integrated reporting processes are more efficient than parallel tracks, even though integration requires upfront coordination effort.
There are several good reasons to consider voluntary adoption:
Investor expectations: If you have international institutional investors, they may expect IFRS-aligned disclosure regardless of local requirements. Voluntary adoption signals that you're proactive about transparency.
Future-proofing: If your jurisdiction hasn't adopted ISSB yet, voluntary alignment now means you're ready when (not if) requirements arrive.
Competitive positioning: Early adoption can differentiate you from peers and demonstrate sustainability leadership — particularly valuable if you're raising capital or entering new markets.
Operational benefits: Building the data systems and governance structures for ISSB reporting makes you more resilient and better equipped to manage sustainability risks, regardless of disclosure requirements.
The main consideration: voluntary adoption still requires rigor. Don't claim ISSB alignment unless you're actually meeting the standards — inconsistent or incomplete voluntary disclosure can damage credibility more than no disclosure at all.
In many cases, yes — which is precisely why ISSB standards are gaining traction. They're designed as a global baseline that jurisdictions can build upon rather than replace.
Likely efficiencies:
Important limitations:
The smartest approach: build your sustainability data and reporting infrastructure to handle ISSB requirements, then layer on additional jurisdiction-specific or framework-specific requirements as needed. This is more efficient than building separate systems for every framework.
ISSB standards are becoming the foundation layer for sustainability disclosure globally. Here's why that matters for your regulatory roadmap:
Regulatory alignment: Many emerging disclosure requirements reference or build on ISSB standards. Being ISSB-ready means you're prepared for regulations that haven't been finalized yet.
Institutional credibility: Because ISSB comes from the IFRS Foundation, regulators trust it as a technically sound baseline. It's likely to be the starting point for future disclosure frameworks.
Investor pressure translates to regulation: What investors demand today often becomes a regulatory requirement tomorrow. ISSB reflects current investor expectations, suggesting where regulations are headed.
Beyond climate: ISSB's current focus is climate (S2), but S1 establishes the architecture for broader sustainability disclosure. As nature, water, human rights, and other topics get more attention, expect additional ISSB standards that build on the S1 framework.
Think of ISSB readiness as building regulatory infrastructure that will serve you across multiple future requirements, not just checking today's compliance boxes.
IFRS S1 & S2 do not mandate a particular form of presentation of information. General requirements in the standards focus on fair presentation and clarity of information, rather than a mandated structure like an index. However, an index, similar to those used for GRI and SASB disclosures, could feasibly be used. While the index is optional, it is often the best mechanism to help investors and other key stakeholders to find information easily.
Start with a gap assessment. Before you build anything new, understand what you already have:
Inventory current disclosure:
Map to ISSB requirements:
Prioritize based on:
Quick wins: Many companies find they're 60-70% of the way to ISSB compliance if they've been doing TCFD and SASB reporting. Focus first on the genuinely new requirements (often Scope 3 emissions and detailed scenario analysis) rather than rebuilding what you already have. If a company publishes an annual 10-k, its content will also support IFRS disclosures
The ISSB offers several resources to support implementation:
Educational materials:
Industry-specific guidance:
Engagement opportunities:
Technical resources:
All of these resources are available free on the ISSB website. The challenge isn't finding resources — it's translating them into your specific business context, which is where consultants like thinkPARALLAX come in.
Honest answer: 12-18 months minimum for most organizations, and longer if you're starting from scratch. Here's a realistic timeline:
Months 1-3: Assessment and planning
Months 4-9: Building infrastructure
Months 10-15: Testing and refinement
Months 16-18: Pre-disclosure preparation
Reality check: Companies that already have mature TCFD and SASB reporting can move faster. Companies starting from scratch may need 24 months or more, especially if they have complex global operations or significant Scope 3 emissions.
The good news: you don't have to be perfect in year one. Build the infrastructure, get your first disclosure out, and improve iteratively. But you do need to start early enough that your first disclosure isn't a scramble.
The IFRS Sustainability Disclosure Standards represent the future of sustainability reporting—but getting from "understanding the requirements" to "ready to disclose" is a significant undertaking.
thinkPARALLAX helps organizations build the strategic foundation for ISSB reporting, from materiality assessment and data infrastructure planning to disclosure development and stakeholder communications. We translate complex standards into practical roadmaps that work for your business.
Ready to get ISSB-ready? Let's talk about where you need to be and how we can help you get there.