CSRD Glossary

IFRS S2

International Financial Reporting Standard S2: Climate-related Disclosures

IFRS S2 part of a new set of sustainability reporting standards developed by the International Sustainability Standards Board (ISSB). IFRS S2 specifically focuses on providing a common framework for companies to disclose information about their climate-related risks and opportunities.

In a nutshell, we can see IFRS S2 as the tip of the iceberg for CSRD. It focuses specifically on climate stuff first, giving companies a heads-up on what kind of sustainability reporting is expected under the bigger CSRD umbrella. Think of it as a mini-test to get everyone ready for the full sustainability reporting rollout.

How does IFRS S2 fit into the broader objectives of ISSB?

  • Meant to create comprehensive global sustainability reporting standards
  • The end goal is a global baseline for sustainability reporting. One common set of climate disclosure requirements means there is no need for compliance with different regulations in various jurisdictions, but one global standard

Important to know about IFRS S2:

  • Provides a common baseline for climate-related financial disclosures.
  • Aims to improve transparency and comparability of climate-related information across companies.
  • Focuses on disclosures related to:
    • Climate-related risks (physical and transitional)
    • Opportunities presented by climate change
    • Governance and management of climate-related issues
    • Emissions and their impact
  • Benefits stakeholders, including investors, lenders, and regulators, by enabling them to make informed decisions regarding climate change and its impact on companies.

Further reading