Formation and mandate
The IFRS Foundation announced the formation of the ISSB at COP26 in Glasgow, bringing together work previously carried out separately. The ISSB consolidated the Climate Disclosure Standards Board and absorbed the Value Reporting Foundation, which had maintained the Integrated Reporting Framework and the SASB Standards. This consolidation is the reason IFRS S2 draws on industry-specific metrics with roots in the SASB Standards, rather than starting from a blank page on measurement.
IFRS S1: general requirements
IFRS S1 sets out the overall requirements for disclosing sustainability-related risks and opportunities that could reasonably be expected to affect an entity's cash flows, access to finance or cost of capital over the short, medium and long term. It requires disclosure across four content areas mirrored from the TCFD recommendations: governance, strategy, risk management, and metrics and targets. IFRS S1 applies to sustainability matters generally, with IFRS S2 providing the detailed climate-specific requirements within that same four-pillar structure.
IFRS S2: climate-related disclosures
IFRS S2 requires disclosure of climate-related risks and opportunities, including transition risks, physical risks, and greenhouse gas emissions across Scopes 1, 2 and 3. It explicitly builds on the TCFD recommendations, and the Financial Stability Board confirmed that the TCFD's role in monitoring climate disclosure has been taken over by the ISSB's standards. Where SASB-derived industry metrics apply, IFRS S2 directs preparers to consider them when identifying the most decision-useful figures for their sector.
Effective date and adoption pathway
IFRS S1 and IFRS S2 are effective for annual reporting periods beginning on or after 1 January 2024, as set by the ISSB. The standards themselves take legal effect only once a jurisdiction incorporates them into national law or listing rules; the International Organization of Securities Commissions (IOSCO) has endorsed the standards, which a number of securities regulators have cited as a basis for their own national sustainability disclosure requirements. Because incorporation is a matter for each jurisdiction, the practical starting date and level of assurance required varies by market.
How ISSB differs from CSRD and GRI
IFRS S1 and IFRS S2 apply a single materiality lens: financial materiality, meaning information is required if it could reasonably affect the assessments investors make of enterprise value. This is narrower than the double materiality the CSRD's ESRS require, which also captures the company's impact on people and the environment regardless of financial effect, and narrower than GRI's impact-first orientation. A company reporting under both ISSB and CSRD standards will generally find the financial materiality analysis for IFRS S2 forms part, but only part, of the wider double materiality assessment the ESRS demand.