A new era of sustainability disclosure
In the past few years, investors and regulators have made one thing clear: sustainability disclosures must be as credible and comparable as financial disclosures.
To meet this demand, the International Sustainability Standards Board (ISSB) introduced two global reporting standards — IFRS S1 and IFRS S2 — which offer a unified, globally consistent framework for how companies disclose sustainability and climate-related information.
Together, IFRS S1 and S2 mark a step toward consistent, investor-focused sustainability disclosures. For companies across the world, these standards are rapidly becoming the reference point for what “good” sustainability reporting looks like.
What are IFRS S1 and S2?
IFRS S1, titled ‘General Requirements for Sustainability-related Financial Information’, defines how companies should disclose sustainability risks and opportunities that could affect enterprise value. It sets out principles for materiality, connectivity between sustainability and financial statements, and how disclosures should be presented.
IFRS S2, titled ‘Climate-related Disclosures’, focuses specifically on climate risk and opportunity. It requires companies to report on governance, strategy, risk management, and metrics & targets — including greenhouse gas emissions (Scopes 1-3), climate resilience, and transition planning.
While IFRS S1 is the foundation, IFRS S2 operationalizes it for climate. Future IFRS standards are expected to expand into areas such as biodiversity and human capital.
Business benefits of reporting with IFRS S1 and S2
Adopting IFRS S1 and S2 enables you to build a strong, future-ready business. Key benefits include:
- Improved credibility: Reporting under IFRS S1 and S2 demonstrates transparency and improves trust with investors and regulators
- Operational efficiency: The reporting process for IFRS S1 and S2 highlight inefficiencies and risk areas, which can support cost reduction and performance improvement.
- Competitive advantage: Early adopters can position themselves as leaders in ESG disclosures and so gain an edge in procurement and supply-chain participation.
- Innovation and resilience: IFRS S1 and S2 support low-carbon innovation and can help companies plan long-term climate resilience.
Preparing for adoption – where to begin?
Adopting IFRS S1 and S2 requires planning, capacity, and commitment. Companies can begin with the following steps:
- Establish governance and oversight: Form board-level sustainability committees or assign executive responsibility for climate-related disclosures;
- Strengthen data systems: Implement reliable data management processes for emissions, energy and climate risk indicators;
- Integrate sustainability into strategy: Embed ESG considerations into business planning, investment decisions, and risk frameworks;
- Train leadership and teams: Build internal capability to interpret, apply, and communicate IFRS S1/S2 standards effectively;
- Engage external expertise: Partner with sustainability consultants or advisors to streamline the transition and ensure compliance with both global and local frameworks.
Rodinia offers tailored support to companies looking to adopt IFRS S1 and S2. Explore our sustainability consulting services and let us assist you in your transition towards sustainable business growth.
