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    IFRS S2 explained: ISSB climate disclosure requirements, reliefs and the 2027 amendments

    IFRS S2 is the ISSB's climate disclosure standard, issued in June 2023 for reporting periods from 1 January 2024 wherever it is adopted. It builds on the four TCFD pillars and adds Scope 1, 2 and 3 emissions, industry metrics, transition plans and scenario analysis. In the UK it applies through UK SRS S2.

    Last updated 6 November 2026 · By Ella Sustainability Team

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    What is IFRS S2?

    IFRS S2 Climate-related Disclosures is one of the first two standards issued by the International Sustainability Standards Board (ISSB), the sustainability board of the IFRS Foundation. The ISSB published IFRS S1 and IFRS S2 in June 2023, and IFRS S2 is effective for annual reporting periods beginning on or after 1 January 2024, with earlier use allowed as long as IFRS S1 is applied too. The standard asks a company to disclose the climate-related risks and opportunities that could reasonably be expected to affect its cash flows, access to finance or cost of capital. It is written for investors, which is why it reads more like a finance document than a sustainability report. IFRS S2 does not apply to anyone on its own. A jurisdiction has to adopt it, or a regulator has to point to it, before it becomes a requirement. The IFRS Foundation reported in June 2025 that 36 jurisdictions had adopted or otherwise used the ISSB Standards or were finalising steps to introduce them. The UK's version, UK SRS S2, was published on 25 February 2026.

    IFRS S1 vs IFRS S2: how the two ISSB standards fit together

    IFRS S2 is always applied with IFRS S1. S1 sets the general rules (materiality, the reporting entity, timing, connected information) and covers sustainability-related risks and opportunities in general. S2 sets the specific climate requirements. In practice most companies meet climate first, because the ISSB lets them limit the first year of reporting to climate-related disclosures only.
    IFRS S1 vs IFRS S2: how the two ISSB standards fit together
    PointIFRS S1IFRS S2
    Full nameGeneral Requirements for Disclosure of Sustainability-related Financial InformationClimate-related Disclosures
    What it coversAll sustainability-related risks and opportunities that could affect the company's prospectsClimate-related physical and transition risks and opportunities
    RoleThe general framework: materiality, reporting entity, timing, comparatives, judgementsThe climate-specific disclosure requirements
    Industry contentCompany may need to consider SASB Standards for industry topicsIndustry-based metrics derived from SASB Standards
    Applied alone?YesNo, always applied with IFRS S1
    UK equivalentUK SRS S1UK SRS S2

    What does IFRS S2 require? The four core content areas

    IFRS S2 follows the same four core content areas as the TCFD recommendations: governance, strategy, risk management, and metrics and targets. The difference is the level of detail. Strategy now includes climate-related transition plans and scenario analysis to assess resilience, and metrics include a fixed set of cross-industry categories plus industry-based metrics. The table shows what each area asks for and the data you will need to answer it.
    What does IFRS S2 require? The four core content areas
    Core content areaWhat IFRS S2 asks you to discloseData and evidence you need
    GovernanceThe board and management bodies that oversee climate-related risks and opportunities, and how they do itBoard and committee terms of reference, minutes, named owners, how climate links to pay
    StrategyClimate risks and opportunities, their effect on the business model, value chain and financial position, transition plans and climate resilience using scenario analysisRisk register, transition plan, scenario analysis, capital plans, site and supplier exposure
    Risk managementHow climate-related risks and opportunities are identified, assessed, prioritised and monitored, and how that fits wider risk managementRisk process documents, assessment criteria, monitoring records
    Metrics and targetsCross-industry metrics including Scope 1, 2 and 3 emissions, industry-based metrics, and climate targets with progressEnergy and fuel data, emissions inventory, Scope 3 category data, targets and baselines

    IFRS S2 metrics: the seven cross-industry categories

    Every company reporting under IFRS S2 has to disclose information in seven cross-industry metric categories, on top of the industry-based metrics that apply to its sector. Greenhouse gas emissions are the one most teams underestimate, because Scope 3 is included and the ISSB expects estimation where direct measurement is not possible.
    IFRS S2 metrics: the seven cross-industry categories
    Cross-industry metric categoryWhat it means in practice
    Greenhouse gas emissionsAbsolute gross Scope 1, Scope 2 and Scope 3 emissions, measured using the GHG Protocol Corporate Standard
    Climate-related transition risksAmount and percentage of assets or business activities vulnerable to transition risks
    Climate-related physical risksAmount and percentage of assets or business activities vulnerable to physical risks
    Climate-related opportunitiesAmount and percentage of assets or business activities aligned with climate-related opportunities
    Capital deploymentCapital expenditure, financing or investment deployed towards climate-related risks and opportunities
    Internal carbon pricesWhether and how the company uses an internal carbon price to assess the cost of its emissions
    RemunerationThe portion of executive management remuneration linked to climate-related considerations

    Scope 3 emissions under IFRS S2

    IFRS S2 requires Scope 1, 2 and 3 emissions measured in line with the GHG Protocol Corporate Standard (2004), and asks which of the 15 Scope 3 categories in the GHG Protocol value chain standard are included in your figure. The ISSB accepts that Scope 3 will rely on estimates. IFRS S2 includes a Scope 3 measurement framework that guides you towards better data over time, favouring direct measurement, primary data from your value chain and verified data over secondary estimates such as spend-based factors. This is the part of the standard where most of the work sits. Category 1 purchased goods and services usually starts spend-based, business travel needs booking data, and employee commuting needs a survey. Our guide to Scope 3 categories explains each of the 15 in plain terms.

    IFRS S2 transition reliefs in the first year

    The ISSB gives first-time reporters optional reliefs. Under IFRS S2 they apply only in the first annual reporting period. The UK took a different line: the final UK SRS S2 removed the time limits on these reliefs and left it to regulators to decide how long they last, and the FCA's rules for listed companies give a one-year delay for Scope 3 and two years for non-climate S1 disclosures.
    IFRS S2 transition reliefs in the first year
    ReliefIFRS S2 (ISSB)UK SRS S2 and FCA rules
    Climate firstReport only climate-related disclosures in year oneNo time limit in UK SRS; FCA allows two years before non-climate S1 disclosures
    Scope 3 emissionsNot required in the first yearNo time limit in UK SRS; FCA allows a one-year delay
    TimingCan publish up to nine months after the period end in year oneUK SRS removed the option to report after the financial statements

    The December 2025 amendments to IFRS S2 (effective 2027)

    On 11 December 2025 the ISSB issued Amendments to Greenhouse Gas Emissions Disclosures, a set of targeted changes to IFRS S2. They are effective for annual reporting periods beginning on or after 1 January 2027, and companies can apply them early. Most of the change lands on banks, insurers and asset managers, but two points matter to everyone: subsidiaries in places with their own emissions rules get clearer relief, and companies can use local global warming potential values where the law requires them.
    The December 2025 amendments to IFRS S2 (effective 2027)
    AmendmentWhat changedWho it affects most
    Category 15 limited to financed emissionsCompanies may limit Scope 3 Category 15 to financed emissions and exclude derivatives, with a qualitative description of what was left outBanks, insurers, asset managers
    Financed emissions subtotalIf Category 15 is included, disclose the total and the financed emissions subtotal within itFinancial institutions
    Industry classificationAlternatives to GICS allowed when breaking down financed emissionsFinancial institutions
    Jurisdictional relief on measurementRelief from the GHG Protocol applies to the part of a group that a jurisdiction requires to use another methodGroups with subsidiaries under local emissions rules
    Global warming potential valuesNew relief to use GWP values required by a jurisdiction instead of the latest IPCC reportGroups reporting under local regimes

    IFRS S2 vs TCFD: what is different?

    IFRS S2 fully integrates the TCFD recommendations, which is why the TCFD disbanded in October 2023 and handed monitoring to the IFRS Foundation. A company that applies IFRS S2 does not need to apply TCFD as well. The extra requirements are where the work grows.
    IFRS S2 vs TCFD: what is different?
    TopicTCFDIFRS S2
    Structure4 pillars, 11 recommended disclosuresSame 4 core content areas, more detailed requirements
    Scope 3 emissionsDisclose if appropriateRequired (after any first-year relief)
    Industry metricsGuidance onlyIndustry-based metrics derived from SASB Standards
    Transition plansEncouraged in later guidanceDisclose climate-related transition plans, including targets
    Scenario analysisRecommendedRequired to assess climate resilience, proportionate to the company
    StatusRecommendations; TCFD disbanded 2023A standard that jurisdictions adopt into law or listing rules

    Who has to report under IFRS S2?

    That depends on where you are listed or operate. UK: UK SRS S2 is the UK-endorsed version of IFRS S2 with minor changes. The FCA's Policy Statement PS26/19, published on 30 September 2026, applies UK SRS to listed companies on a comply or explain basis for accounting periods beginning on or after 1 January 2027, so the first reports land in 2028. Large private companies are not yet in scope; the government says it will consult on any wider mandatory use. Other countries: Australia, Hong Kong, Brazil, Malaysia, Nigeria and others have adopted or are introducing ISSB-based rules, each with its own scope and timing. US: California's SB 261 allows a climate risk report prepared under the ISSB standards, although enforcement has been paused by a Ninth Circuit injunction since November 2025. If you sell to listed companies or banks, expect IFRS S2-shaped data requests even if you are not in scope yourself.

    Our view: the narrative is the easy half of IFRS S2

    On a demo this week, the person who runs sustainability at a privately owned company asked whether they would still need a TCFD report or the newer ISSB version. Fair question, and the answer is simpler than it sounds: the structure is the same, so the narrative carries over. What does not carry over is the data. That same team runs its Scope 1 and 2 numbers well, has data for four or five Scope 3 categories of uncertain quality, and keeps everything in spreadsheets. That is a common starting point, and it is exactly where IFRS S2 bites, because Scope 3 becomes a required metric and every number needs a method and a source that an auditor can follow. So start with the inventory. Work back from your first reporting year, get a full year of Scope 1, 2 and priority Scope 3 data collected a year ahead, and only then polish the words.

    How to prepare for IFRS S2 reporting

    1. Confirm which regime applies to you (UK SRS via the FCA, another jurisdiction, or customer and lender requests) and your first reporting period. 2. Map your existing TCFD or CDP disclosures to the four IFRS S2 core content areas and mark the gaps. 3. Fix the reporting boundary so it matches your financial statements, including entities acquired during the year. 4. Build or update your Scope 1, 2 and 3 inventory, recording which of the 15 Scope 3 categories are included and how each is estimated. 5. Collect the data for the seven cross-industry metric categories and your industry-based metrics. 6. Run proportionate scenario analysis and document your transition plan and targets. 7. Decide which reliefs you will use and say so in your compliance statement. 8. Keep a source and an owner for every number so the disclosure is ready for assurance.

    How Ella helps with IFRS S2 and UK SRS S2

    Ella is AI-native ESG reporting and carbon accounting software built as an agent. For IFRS S2 the hard part is the emissions data, and that is where Ella does the work. Ella sets your boundary from how the business operates, builds the Scope 1 to 3 checklist instantly and sends collect links to the people who hold the data. It tracks missing responses and chases them, reads bills, receipts and spend exports you drag in, runs employee commuting and travel surveys, and calculates activity and spend-based emissions automatically. Every figure keeps its source, so the same audit-ready data set feeds IFRS S2, UK SRS S2, SECR, CDP and customer questionnaires, with Ella's sustainability team on hand for expert support.

    How Ella helps

    ESG reporting software

    IFRS S2, UK SRS, CSRD and VSME reporting built on data Ella collects and cleans for you.

    Carbon accounting software

    Scope 1, 2 and 3 emissions with a source on every number, ready for IFRS S2 and SECR.

    ESG strategy software

    Transition plans, targets and reduction roadmaps built from the data you already hold.

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    Frequently Asked Questions

    What is IFRS S2 in simple terms?

    IFRS S2 is the ISSB's global standard for climate-related disclosures. It asks companies to explain to investors how climate risks and opportunities affect the business, using four areas (governance, strategy, risk management, metrics and targets) and including Scope 1, 2 and 3 emissions.

    What is the difference between IFRS S1 and IFRS S2?

    IFRS S1 sets the general requirements for all sustainability-related financial disclosures. IFRS S2 sets the specific requirements for climate. IFRS S2 is always applied together with IFRS S1, and companies can start with climate only in their first year.

    When is IFRS S2 effective?

    IFRS S2 is effective for annual reporting periods beginning on or after 1 January 2024, but only where a jurisdiction adopts it. The December 2025 amendments apply from 1 January 2027, with early use permitted. UK listed companies report against UK SRS S2 for periods from 1 January 2027.

    Does IFRS S2 require Scope 3 emissions?

    Yes. IFRS S2 requires Scope 1, 2 and 3 emissions measured with the GHG Protocol, and disclosure of which Scope 3 categories are included. First-time reporters do not have to disclose Scope 3 in their first year, and the UK has left the length of that relief to regulators.

    Is IFRS S2 the same as TCFD?

    No, but it is built on it. IFRS S2 fully integrates the TCFD recommendations and adds requirements such as Scope 3 emissions, industry-based metrics, transition plans and scenario analysis. A company applying IFRS S2 does not need to apply TCFD separately.

    What is UK SRS S2 and how is it different from IFRS S2?

    UK SRS S2 is the UK-endorsed version of IFRS S2, published on 25 February 2026. The differences are minor: considering SASB Standards is optional, the time limits on first-year reliefs were removed, and reporting after the financial statements is not allowed.

    Do private companies have to report under IFRS S2 in the UK?

    Not yet. In the UK the FCA applies UK SRS to listed companies on a comply or explain basis from 2027. The government has said it will consult on whether to make UK SRS mandatory for other companies, which could include large private companies.

    What software helps with IFRS S2 reporting?

    ESG reporting software that handles emissions data well helps most, because Scope 1, 2 and 3 are the hardest part of IFRS S2. Ella is AI-native ESG software built as an agent that collects, cleans and calculates the data with a source on every number.

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