ISSB votes to amend Climate-related disclosures

On 29 January 2025, the International Sustainability Standards Board voted to make certain technical amendments to its IFRS S2 Climate-related Disclosures.

The proposed technical amendments follow consultation with various financial stakeholders, and are intended to ensure that the standards remain usable and fit for implementation. These include:

• permitting entities to omit disclosing Scope 3 Category 15 greenhouse gas (GHG) emissions (i.e. GHG emissions that arise from a company’s financial investments);
• extending jurisdictional relief to use alternative global warming potential (GWP) values required by a jurisdictional authority, instead of the GWPs from the IPCC;
• applying the jurisdictional relief to use a method other than the GHG Protocol Corporate Standard to measure GHG emissions; and
• exemptions for using the Global Industry Classification Standard (GICS) when disaggregating financed emissions by industry. It is interesting to note that this was also one of the very few proposed amendments suggested by the Financial Reporting Council as part of its endorsement decision paving the way for implementation in the UK.

Together with IFRS S1 General Requirements for Disclosure, IFRS S2 Climate-related Disclosures forms part of the IFRS's flagship sustainability disclosure standards which aim to create a common international language for sustainability disclosures.

Many jurisdictions have indeed aligned to the ISSB Standards, with Australia ushering in mandatory climate reporting in line with IFRS S2 in 2024 and the UK currently going through the process of endorsing IFRS S1 and S2 ahead of implementation for listed companies expected from 1 January 2026.

IFRS has commented that while they acknowledge the changes may cause disruption to entities and jurisdictions already using IFRS S1 and IFRS S2, they believe the benefits of the amendments outweigh the disruption.

A revised text for IFRS S2 is yet to be published.