IFRS S2: 8 industries with prescribed physical-risk metrics

An earlier piece made the case that the standard hands the preparer four definitional ambiguities and walks away. That is broadly true. For about 60 of the 68 SASB-derived industry codes that IFRS S2 routes preparers to via Para 32, vulnerability is the preparer’s problem to define.

For eight industries, it is not. The Industry-based Guidance on Implementing IFRS S2 (the Industry-based Guidance) carries a XX-XX-450a Climate Change Adaptation topic code in eight specific sectors: Real Estate, Mortgage Finance, Insurance, Water Utilities, Hotels & Lodging, Health Care Delivery, Managed Care, and Forestry Management. For these eight, the Industry-based Guidance specifies the threshold, the unit, and the sector segmentation. The “amount and percentage of assets vulnerable to climate-related physical risks” question that Para 29(c) puts to the preparer is largely answered by Para 32 routing them to the IBG-450a metric.

A defensible disclosure for these eight industries carries two metrics, not one. The IBG-450a quantitative metric is the sector-specific numerator. The Para 29(c) percentage-of-carrying-amount is the universal denominator. Both are required, and both anchor to the same scenario, horizon, and threshold pick. The two are complementary, not substitutes.

This piece walks that architecture. It is the construction guide for preparers in those eight industries who are reading Para 29(c) literally and concluding the standard is silent. The standard is not silent for them.

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The eight industries

The Industry-based Guidance topic codes that impose a XX-XX-450a Climate Change Adaptation disclosure floor are listed below, sorted by the metric form the Industry-based Guidance hands to preparers. You don’t need to memorize these codes; the table maps each one to a plain-English sector and metric.

Industry	Topic code	What’s at risk?	The data you report	Compared against your total…
Real Estate	IF-RE-450a.1	Buildings	Square metres of floor area sitting in 100-year flood zones	Investment-property book value
Mortgage lending	FN-MF-450a.1 + .2	Loans	Number and dollar value of mortgages on flood-zone homes (plus expected loss and loss-given-default)	Loan book
Water utilities	IF-WU-450a.1	Treatment plants	Daily treatment capacity (m³/day) sitting in 100-year flood zones	Property, plant & equipment
Hotels & lodging	SV-HL-450a.1	Hotel facilities	Number of hotels in 100-year flood zones	Property, plant & equipment
Insurance	FN-IN-450a.1	Insurance portfolio	Worst-case losses at three storm severities (1-in-50, 1-in-100, 1-in-250 years)	Insured portfolio
Hospitals & clinics	HC-DY-450a.1	Facilities + patient-health risk	Description only (no specific number required)	Facility infrastructure
Managed care	HC-MC-450a.1	Member-region health patterns	Description only	Member contracts (qualitative estimate)
Forestry	RR-FM-450a.1	Forests	Description only (multi-hazard)	Forestland

Two tiers emerge. Five sectors carry quantitative metrics: Real Estate, Mortgage Finance, Water Utilities, Hotels, Insurance. Three sectors carry discussion-only metrics: Health Care Delivery, Managed Care, Forestry Management.

A sharper observation. Four of the five Tier 1 quantitative metrics converge on the identical verbatim threshold definition. The Industry-based Guidance defines a 100-year flood zone as “land areas subject to a 1% or greater chance of flooding in any given year. Such areas also may be referenced as being subject to the 1% annual chance flood, the 1% annual exceedance probability flood, or the 100-year flood” across IF-RE-450a.1, FN-MF-450a.1, IF-WU-450a.1, and SV-HL-450a.1. The drafters chose a convergent disclosure threshold across diverse sectors. The “vulnerable under what threshold” question that Para 29(c) leaves open has a textbook answer for Tier 1 sectors. It is RP100. The standard hands it to the preparer.

Insurance is the outlier on the Tier 1 list. FN-IN-450a.1 uses Probable Maximum Loss methodology at three exceedance scenarios (1-in-50, 1-in-100, 1-in-250) rather than the asset-area-in-flood-zone construction. The 1-in-100 PML bucket is conceptually adjacent to RP100 but the metric is monetary loss, not asset count or floor area.

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The two-metric pattern

For Tier 1 IBG-450a preparers, a defensible IFRS S2 disclosure carries two complementary metrics:

The IBG-450a numerator. Sector-specific, quantitative, threshold-based. For Real Estate, square metres of leasable floor area in 100-year flood zones, by FTSE EPRA Nareit property sector. For Mortgage Finance, number and value of mortgage loans on properties in 100-year flood zones. For Water Utilities, capacity in m³/day of wastewater treatment facilities in 100-year flood zones. For Hotels, count of lodging facilities in 100-year flood zones. For Insurance, PML in reporting currency at 1-in-50, 1-in-100, 1-in-250 likelihoods, gross and net of catastrophe reinsurance, by hazard type and geography. Required by Para 32 routing to the relevant Industry-based Guidance industry volume.

The Para 29(c) percentage-of-carrying-amount denominator. Universal, cross-industry, and required by the bare act regardless of sector. The question Para 29(c) actually asks is “the amount and percentage of assets or business activities vulnerable to climate-related physical risks”. Appendix B65(e) clarifies that for the carrying-amount calculation, “an entity would consider whether the carrying amount of assets used is consistent with amounts included in the financial statements”. This is the IFRS link between the disclosure metric and the financial statement line item. For a Real Estate preparer the carrying amount is the Investment Property line; for a Mortgage Finance preparer it is the loan asset book; for a Water Utility it is the property, plant, and equipment supporting wastewater treatment.

The two metrics are not substitutes. They answer different questions for different audiences. The IBG-450a metric tells an investor what fraction of physical assets are in a defined hazard exposure zone. The Para 29(c) metric tells an investor what fraction of book-value carrying amount is vulnerable. Both are required; both should anchor to the same scenario, horizon, and threshold pick to maintain internal consistency [IFRS S2.B17].

A common error in first-wave practice is treating the IBG-450a metric as a substitute for Para 29(c). It is not. Para 32 says the entity “shall disclose industry-based metrics” in addition to, not instead of, the cross-industry metric categories in Para 29 [IFRS S2.32]. Para 23 makes the same point in reverse, requiring preparers to consider both the cross-industry categories and the industry-based metrics when preparing strategy and risk management disclosures [IFRS S2.23].

A second common error is failing to anchor the two metrics to the same scenario set. The IBG-450a numerator is constructed under a chosen scenario, horizon, and threshold. The Para 29(c) carrying-amount percentage must be constructed under the same set, or the two metrics tell different stories that cannot be reconciled. Internal consistency is not optional. Appendix B17 specifies that an entity with high exposure to climate-related risks should apply more advanced quantitative approaches, and that internal consistency between disclosed metrics is part of what makes a disclosure auditable.

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Worked example: how a Real Estate company builds this disclosure

Take a stylized Australian industrial REIT preparer entering its first mandatory AASB S2 reporting period. The portfolio is 300-500 industrial and logistics properties across major metropolitan markets in Australia, Asia-Pacific, and selected gateway cities in North America and Europe. FTSE EPRA Nareit classifies the portfolio under Industrial property sector. The carrying amount is reported under Investment Property in the consolidated balance sheet. The preparer wants to satisfy IF-RE-450a.1 and Para 29(c) as a two-metric disclosure.

Step 1. Property universe identification. The preparer enumerates every property in the portfolio at the FTSE EPRA Nareit segmentation level. For an industrial REIT this is straightforward. The Industry-based Guidance also requires that “the scope of disclosure shall include all the entity’s properties located in 100-year flood zones, regardless of the jurisdiction in which they are located” (IF-RE-450a.1 sub-element 2). Global scope is mandatory. Joint venture properties, partnership-held properties, and properties under development should be enumerated separately per IF-RE-450a.1 sub-element 4, which permits but does not require disclosure of planned floor area for properties under development.

Step 2. Flood-zone data layer selection. The Industry-based Guidance defines the threshold (100-year flood zone, 1% annual exceedance) but does not specify the data source. The preparer’s defensible options are: jurisdiction-issued maps where they exist (FEMA NFHL in the United States, Environment Agency flood maps in the UK, equivalent in other regulated markets); global flood hazard datasets (JRC CEMS GloFAS at approximately 90-metre resolution, WRI Aqueduct Flood Hazard Maps V2 at approximately 1-kilometre resolution); or a vendor-supplied climate risk service that combines these or provides proprietary modelling. Each has trade-offs. Jurisdiction-issued maps are the most authoritative for regulated markets but absent for many. JRC and WRI are globally consistent but rely on SRTM-based digital surface models that systematically underreport flood depth in dense urban areas (the SRTM urban-bias issue, addressed in §8 below). Vendor services may correct for some of these gaps but require independent validation.

Step 3. Spatial intersection method. The preparer needs a documented rule for what counts as “in” a 100-year flood zone. Options include centroid intersection (the property’s lat-lon centroid falls inside the polygon), polygon overlap (any portion of the property’s parcel polygon overlaps the flood zone), or a buffer test (the centroid plus a defined buffer intersects). The choice affects the floor area count materially in dense urban areas. Polygon overlap is the most conservative and the most defensible to an auditor; centroid is the simplest and most common in vendor outputs. The disclosure should state the method explicitly.

Step 4. Floor area aggregation. For properties classified as in a 100-year flood zone under the chosen method, the preparer sums the leasable floor area in square metres, broken out by FTSE EPRA Nareit property sector. The output is the IF-RE-450a.1 numerator: “Area of properties located in 100-year flood zones, by property sector”.

Step 5. Carrying-amount aggregation under the same threshold and scenario. The preparer takes the same set of properties and sums their carrying amount as reported under the Investment Property line of the consolidated balance sheet. The output is the Para 29(c) numerator. Dividing by total Investment Property carrying amount produces the Para 29(c) percentage. Para 31 routes preparers to Appendix B64-B65 for the construction of this disclosure; B65(e) specifies the FS-consistency requirement [IFRS S2.31; B65(e)].

Step 6. Disclose both metrics with stated methodology. The disclosure carries:

• The chosen scenario set and rationale per Para 22(b)(i)(1)-(7) [IFRS S2.22]
• The chosen time horizon
• The chosen flood-zone data source
• The spatial intersection method
• The IF-RE-450a.1 floor area output by FTSE EPRA Nareit sector
• The Para 29(c) carrying-amount percentage, with a Para 30 reasonable-and-supportable note where data quality varies
• An explicit statement of whether the figure is gross or net of borrower-led adaptation (the convention for both IFRS S2 and the parallel ESRS E1-9 metric is gross, consistent with the ESRS “before adaptation actions” language)

Cohort observation. Across the four published cohort reviews of first-wave AASB S2 and IFRS S2 reporters (KPMG FAST 30, NZ FMA, PwC AASB S2 First Impressions, Deloitte Wave 1), roughly one-third to one-half of first-wave reporters did not quantify Para 29(c) in their initial disclosure, a finding the empirical companion to this piece classified across a four-tier classification ladder from OMITTED to QUANTIFIED. The pattern holds even for IBG-450a sector preparers where construction is most feasible. The proportionality clause under Para 30 [IFRS S2.30] has been invoked broadly. Auditors are tolerating this in year one. The narrowing-tolerance trajectory is well-flagged by Big-4 commentary; reporters in IBG-450a sectors who skip the construction in year one accumulate disclosure debt that auditors will sharpen on in years two and three. The worked real estate IFRS S2 disclosure shows what this 6-step construction looks like applied paragraph by paragraph.

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Which scenarios to choose: energy policy vs climate scenario tension

A defensible IBG-450a numerator construction requires a chosen scenario set. This is where preparers in some sectors hit a documented conflict between what the Industry-based Guidance specifies and what physical-risk vendors produce.

If you’re using…	Examples	What they project	Right tool for the physical-risk metric?
Energy-policy scenarios	IEA’s STEPS, APS, Net Zero 2050	Future energy demand, technology mix, and policy paths	No. These don’t project hazards.
Climate scenarios	IPCC SSP-RCP combinations (e.g. SSP2-4.5, SSP5-8.5) or NGFS scenarios	Future temperatures, rainfall, sea level rise, weather extremes	Yes. These give you the hazard data.

IF-RE-450a.2 (the Real Estate narrative metric paired with the quantitative .1) specifies that “the entity shall disclose the climate change scenarios used to determine the risks and opportunities presented by climate change as defined by the International Energy Agency in its annual World Energy Outlook”. The IEA WEO scenarios are policy-and-energy-pathway focused: Stated Policies (STEPS), Announced Pledges (APS), Net Zero Emissions by 2050 (NZE), Sustainable Development (SDS). These are transition-focused scenarios that describe energy demand, technology mix, and policy trajectories. They are not physical-risk-focused scenarios.

The physical-risk modelling community uses a different scenario set: the SSP-RCP combinations from CMIP6 (SSP1-2.6, SSP2-4.5, SSP5-8.5), the older RCP-only framework from CMIP5 (RCP2.6, RCP4.5, RCP8.5), and the NGFS scenarios that combine these with policy and macroeconomic pathways. These are the scenarios that drive temperature, precipitation, sea level, and hazard projections at the spatial resolution required for asset-level flood-zone construction.

The conflict is real but not irresolvable. A defensible position for a Real Estate preparer is the two-source approach: use SSP-RCP or NGFS for the IF-RE-450a.1 numerator construction, because the underlying hazard projections are produced under those scenario sets and not under IEA WEO; cite IEA WEO compliance separately via the IF-RE-450a.2 narrative discussion of risks and opportunities. The two scenario sets answer different questions for the same disclosure.

The same pattern applies in modified form to Insurance. FN-IN-450a.1 mandates that the entity “shall describe climate-related scenarios used… as aligned with the Task Force on Climate-related Financial Disclosures (TCFD) Supplemental Guidance for Insurance Companies”. The TCFD Insurance Supplemental Guidance recommends scenarios consistent with Paris-aligned and high-emissions pathways, which maps cleanly to the SSP-RCP or NGFS sets. Less of a tension than for IF-RE.

For Forestry Management, RR-FM-450a.1 cross-references IPCC Climate Scenario Process, CDSB Framework Requirements, and CDP Climate Change Questionnaire. These point preparers toward IPCC AR6 scenario language, again mapping cleanly to the SSP-RCP set.

The pattern across the eight IBG-450a sectors: the Industry-based Guidance specifies external framework cross-references that are not always aligned with the scenario sets that physical-risk vendors produce. Preparers should anchor the numerator construction to the scenario set their vendor produces, then cite framework compliance via the narrative metrics.

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The other four Tier 1 sectors

Industry	What counts	What doesn’t	One key thing to know
Mortgage lending	Home mortgages your bank holds (first mortgages and second-position liens on 1-4 family homes)	Mortgages held for resale, mortgage-backed securities, and mortgages you service but don’t hold on your own books	Use standard credit-risk math: expected loss = probability of default × loss given default
Water utilities	All your wastewater treatment plants, anywhere in the world	Nothing	Also report separately: sewer overflows + service outages
Hotels & lodging	All your hotel locations, anywhere in the world	Nothing	No companion metric required
Insurance	Policies covering 7 weather hazards (hurricanes, tornadoes, tsunamis, floods, droughts, extreme heat, winter storms)	Earthquakes and volcanic eruptions are out of scope	Report two numbers: gross (before reinsurance) and net (after reinsurance)

Mortgage Finance (FN-MF-450a). The same RP100 threshold convention as Real Estate, applied to mortgage loans rather than properties. FN-MF-450a.1 requires “(1) Number and (2) value of mortgage loans in the entity’s portfolio underwritten on properties located in 100-year flood zones”. Scope is global; the §6 table above lists what counts and what is excluded. The companion metric FN-MF-450a.2 adds Basel-style credit risk discipline: “(1) Total expected loss and (2) Loss Given Default (LGD) attributable to mortgage loan default and delinquency because of weather-related natural catastrophes, by geographical region”. Expected loss equals sum of possible losses weighted by probability; LGD is the share of asset lost in default. For a mortgage lender the two-metric pattern is: IBG-450a.1 numerator (loan count and value in flood zones) plus IBG-450a.2 monetary EL/LGD plus Para 29(c) carrying-amount-of-vulnerable-loans-divided-by-total-loan-book.

Water Utilities & Services (IF-WU-450a). IF-WU-450a.1 requires “Wastewater treatment capacity located in 100-year flood zones” in cubic metres per day. The unit is operational capacity, not asset value. The companion metrics IF-WU-450a.2 (sanitary sewer overflows by number, volume, percentage recovered) and IF-WU-450a.3 (unplanned service disruptions and customers affected by duration) add operational continuity disclosure. Scope is all wastewater treatment facilities globally. For a water utility the two-metric pattern is: IBG-450a.1 capacity numerator plus the operational continuity metrics plus Para 29(c) carrying-amount-of-vulnerable-PPE-divided-by-total-PPE.

Hotels & Lodging (SV-HL-450a). The simplest of the four convergent-RP100 metrics. SV-HL-450a.1 requires “Number of lodging facilities located in 100-year flood zones”. Scope is all lodging facilities globally. No companion metric. For a hotel operator the two-metric pattern is: IBG-450a.1 facility count numerator plus Para 29(c) carrying-amount-of-vulnerable-PPE-divided-by-total-PPE.

Insurance (FN-IN-450a). The most prescriptive of the eight. FN-IN-450a.1 requires PML “using, at a minimum, three likelihood of exceedance scenarios: (1) 2% (1-in-50); (2) 1% (1-in-100); (3) 0.4% (1-in-250)”. PML must be disaggregated by geography and reported gross AND net of catastrophe reinsurance, across the seven hazard categories listed in the §6 table. The companion metric FN-IN-450a.2 requires monetary losses from modelled and non-modelled catastrophes, IFRS 17 normative for the policyholder benefits and claims accounting. FN-IN-450a.3 requires description of incorporation into underwriting and capital adequacy, referencing TCFD physical/transition/liability risk taxonomy. For an insurer the two-metric pattern is: IBG-450a.1 PML numerator (the most prescriptive single physical-risk disclosure in IFRS S2) plus IBG-450a.2 monetary loss disclosure plus Para 29(c) carrying-amount-of-insured-portfolio-vulnerable-divided-by-total-insured-portfolio.

The pattern across the four post-RE Tier 1 sectors: a quantitative IBG-450a numerator constructed under the convergent RP100 threshold (or PML 1-in-100 for insurance), paired with the universal Para 29(c) carrying-amount percentage. The construction is sector-specific but the architecture is identical.

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The three Tier 2 sectors: discussion-only IBG-450a

For Health Care Delivery, Managed Care, and Forestry Management, the IBG-450a metric is discussion-only. There is no quantitative threshold handed to the preparer. This does not exempt preparers in these sectors from Para 29(c). It means the preparer must construct the Para 29(c) carrying-amount-vulnerable percentage using their own threshold definition while also disclosing the IBG-required narrative.

Health Care Delivery (HC-DY-450a.1). The Industry-based Guidance requires “Description of policies and practices to address: (1) the physical risks because of an increased frequency and intensity of extreme weather events, (2) changes in the morbidity and mortality rates of illnesses and diseases associated with climate change and (3) emergency preparedness and response”. Three pillars: physical infrastructure (flood-prone or hurricane-prone facility locations, basement medical equipment, backup power); disease prevalence (vector-borne tropical disease migration, heat-related lung disease, waterborne disease); emergency preparedness (regulatory environment, voluntary best-practice frameworks like the WHO Hospital Emergency Response Checklist). For a health care delivery preparer, the discussion satisfies HC-DY-450a.1; the Para 29(c) construction requires the preparer to pick a threshold (a defensible position is RP100 to maintain consistency with the IBG-450a-using sectors) and apply it to the carrying amount of facility PPE.

Managed Care (HC-MC-450a.1). Similar discussion-only structure. “Discussion of the strategy to address the effects of climate change on business operations and how specific risks presented by changes in the geographical incidence, morbidity and mortality of illnesses and diseases are incorporated into risk models”. Three sub-areas: geographical incidence of disease, morbidity, mortality. Discussion shall include projected impacts on revenue, costs, plan affordability. Para 29(c) construction for a managed care preparer is harder because the asset base is intangible (member contracts, brand, claims-handling infrastructure) rather than property-based; the defensible position is to disclose the proportionality argument under Para 30 explicitly while still attempting a qualitative percentage estimate, rather than declining the numeric disclosure entirely.

Forestry Management (RR-FM-450a.1). The most prescriptive of the three Tier 2 metrics, comes closest to scenario-analysis discipline. “Description of strategy to manage opportunities for and risks to forest management and timber production presented by climate change”. The discussion must cover physical impacts (temperature, growth rates, seasonality, water availability, pest migration, fire frequency, extreme weather), policy and regulation, international accords, indirect consequences, social risks. For each risk the preparer must provide description, strategic impact, projected magnitude, time frame, likelihood. Disaggregation is required by region, by product, by tree species, by plantation versus natural forestlands. The Industry-based Guidance cross-references CDSB Framework Requirements 02/03/05/06 and CDP Climate Change Questionnaire CC2.1 / CC5.1 / CC6.1. For a forestry preparer the Para 29(c) construction is anchored to forestland carrying amount; the defensible threshold is a multi-hazard composite (fire risk, drought, pest exposure under chosen scenario) rather than the single RP100 flood-zone convention.

The pattern across the three Tier 2 sectors: IBG-450a hands a description structure but not a quantitative threshold; preparers fill the gap with disciplined narrative plus a Para 29(c) carrying-amount percentage built on their own defensible threshold pick.

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Honest gaps

The IBG-450a shortcut narrows the construction problem for eight industries. It does not eliminate it. Three honest gaps deserve disclosure under Para 30 reasonable-and-supportable language.

SRTM urban-bias affects RP100 flood-zone determinations in dense urban coastal markets

Both JRC CEMS GloFAS and WRI Aqueduct Flood Hazard Maps V2, the two most-used global flood hazard datasets, rely on SRTM-derived digital surface models internally. SRTM is a Digital Surface Model: it measures the top of buildings and tree canopy, not bare ground. In dense urban areas, SRTM overstates ground elevation by 5-20 metres.

Internal validation work has confirmed this in Florianopolis, Brazil, where ground elevation of approximately 3 metres returned an SRTM-reported elevation of 19.8 metres, with the consequence that all flood layers returned zero depth across all return periods and scenarios. The same bias pattern affects Mumbai, Jakarta, Miami Beach, Bangkok, Ho Chi Minh City, and any dense urban coastal market where the SRTM rooftop signal dominates the bare-earth elevation. For a Tier 1 IBG-450a preparer concentrated in coastal urban markets, the RP100 floor area count derived from JRC or WRI underreports actual exposure.

The defensible response is to disclose the data source explicitly, flag the SRTM urban-bias limitation in the methodology note, and where possible supplement with bare-earth elevation models (FABDEM is a 30-metre bare-earth Digital Terrain Model that corrects the rooftop bias and is freely available; not a substitute for site-specific LiDAR but a meaningful improvement on SRTM at portfolio scale).

Single-model approach in vendor-supplied scenario outputs

Most physical-risk vendors that supply preparers with hazard projections under SSP-RCP or NGFS scenarios use a single global climate model with a fallback chain, not a multi-model ensemble. The reason is computational: querying a multi-model ensemble at portfolio scale exceeds the compute budgets of cloud-based geospatial infrastructure. The consequence is that a single-model output does not capture the full range of inter-model uncertainty. Different climate models produce meaningfully different projections for the same scenario. Para 30 reasonable-and-supportable disclosure should name the model used, acknowledge the single-model limitation, and report results as point estimates rather than as ranges with confidence intervals.

Industry-based Guidance amendment risk

The IFRS Foundation’s Phase 1 Industry-based Guidance amendments were issued as exposure draft in July 2025 with comment period closing November 2025. Finalization is expected in 2026. The Phase 1 amendments target nine prioritized industries: oil and gas, electric utilities, mining, asset management, commercial banks, insurance, building products, real estate, agricultural products. Three of the nine are IBG-450a sectors covered in this piece (commercial banks via FN-MF, insurance via FN-IN, real estate via IF-RE). The metric language for these sectors may change. Preparers in these three sectors should track the Phase 1 finalization and be prepared to restate or update disclosures in subsequent periods if the metric definitions change. The convergent RP100 threshold is unlikely to change but the segmentation, unit, and scope language may.

These constraints are not theoretical for vendors of physical-risk data. Continuuiti’s own data layer documents both publicly: the Flood Depth Methodology carries a ‘jrc_artifact’ quality flag that surfaces SRTM-bias cases where projected depths are identical across all return periods, and the Climate Risk Methodology discloses the single-climate-model approach with automatic fallback to alternatives. The disclosure discipline is the same whether the methodology is internal or vendor-supplied: name the source, name the limitation, name the mitigation.

The vendor data quality, single-model uncertainty, and amendment-risk gaps are honest constraints on the IBG-450a shortcut. None of them disqualify the construction. All of them belong in the methodology note that accompanies the disclosure.

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Picking-positions checklist

Per-sector summary of what the Industry-based Guidance hands the preparer versus what is still a preparer pick.

Pick	Tier 1 quantitative (RE / Mortgage / Water / Hotels)	Tier 1 PML (Insurance)	Tier 2 discussion (Healthcare / Forestry)
Threshold	Handed: RP100 flood zone	Handed: 1-in-50, 1-in-100, 1-in-250 PML exceedance	Preparer pick (recommend RP100 for consistency where applicable; multi-hazard composite for forestry)
Unit	Handed: floor area / loan value / capacity / facility count	Handed: reporting currency	N/A (discussion only)
Sector segmentation	Handed: FTSE EPRA Nareit / by region / facility-level	Handed: by hazard type × geography × gross + net	Handed: per Industry-based Guidance narrative structure
Scenario set	Preparer pick (recommend SSP-RCP or NGFS for the numerator; cite IEA WEO or framework cross-reference via narrative)	Handed: TCFD Supplemental Guidance for Insurance Companies aligned	Handed for forestry (CDSB / CDP / IPCC); preparer pick for healthcare
Time horizon	Preparer pick	Preparer pick	Preparer pick
Data source	Preparer pick (jurisdiction / global / vendor; disclose explicitly)	Preparer pick (CAT model; disclose methodology)	Preparer pick
Spatial intersection method	Preparer pick (recommend polygon overlap; disclose)	Preparer pick (CAT model methodology)	N/A
Adaptation treatment	Preparer pick (recommend gross of borrower-led adaptation, consistent with ESRS E1-9)	Preparer pick (gross + net both required by Industry-based Guidance)	Preparer pick
Para 29(c) carrying-amount denominator	Preparer pick (recommend FS-line-item-consistent per B65(e))	Preparer pick	Preparer pick

The picks not handed by the Industry-based Guidance are the picks that distinguish a defensible disclosure from a thin one. The Industry-based Guidance narrows the problem but does not eliminate it.

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Sources cited

Primary sources (IFRS S2 standard text)
– IFRS Foundation, IFRS S2 Climate-related Disclosures (2023, as amended December 2025). Para 22, Para 22(b)(i)(1)-(7), Para 23, Para 25, Para 29(c), Para 30, Para 31, Para 32. Verbatim text via IFRS Foundation portal (https://www.ifrs.org/issued-standards/list-of-standards/ifrs-s2-climate-related-disclosures/) and project-internal plaintext extract.
– IFRS Foundation, IFRS S2 Appendix B. B17 (high-exposure quantitative requirement), B64-B65 (anticipated financial effects), B65(e) (carrying amount FS-consistency).

Industry-based Guidance on Implementing IFRS S2 (ISSB 2025 issued)
– IF-RE-450a.1, IF-RE-450a.2 (Real Estate, Climate Change Adaptation). IFRS Foundation Industry-based Guidance portal.
– FN-MF-450a.1, FN-MF-450a.2, FN-MF-450a.3 (Mortgage Finance, Environmental Risk to Mortgaged Properties).
– IF-WU-450a.1, IF-WU-450a.2, IF-WU-450a.3, IF-WU-450a.4 (Water Utilities & Services, Network Resiliency & Impacts of Climate Change).
– SV-HL-450a.1 (Hotels & Lodging, Climate Change Adaptation).
– FN-IN-450a.1, FN-IN-450a.2, FN-IN-450a.3 (Insurance, Physical Risk Exposure).
– HC-DY-450a.1 (Health Care Delivery, Climate Change Impacts on Human Health & Infrastructure).
– HC-MC-450a.1 (Managed Care, Climate Change Impacts on Human Health).
– RR-FM-450a.1 (Forestry Management, Climate Change Adaptation).

Cohort reviews of first-wave IFRS S2 / AASB S2 disclosures
– KPMG, AASB S2 First Impressions (FAST 30 dashboard tracking AU Group 1 mandatory reporters).
– Financial Markets Authority New Zealand (NZ FMA), Review of climate-related disclosure entities (2024 review of NZ CS-aligned disclosures).
– PwC Australia, AASB S2 Unpacked: First-Wave Reporters Review (2025).
– Deloitte, Wave 1 Climate Disclosures analysis (2025).
– SLR Consulting, First-Wave AASB S2 Compliance Patterns (2025 analysis).

Secondary frameworks cross-referenced by IBG-450a metrics
– IEA, World Energy Outlook (annual; STEPS / APS / NZE / SDS scenarios). Specified by IF-RE-450a.2 for narrative scenario disclosure.
– TCFD, Supplemental Guidance for the Insurance Industry (2017, updated 2021). Mandated by FN-IN-450a.1 for scenario alignment.
– IFRS 17 Insurance Contracts. Normative for FN-IN-450a.2 policyholder benefits and claims accounting.
– CDSB, Framework for reporting environmental and social information. Cross-referenced by RR-FM-450a.1.
– CDP, Climate Change Questionnaire (CC2.1 / CC5.1 / CC6.1 modules). Cross-referenced by RR-FM-450a.1.
– IPCC, AR6 Working Group I Physical Science Basis (2021). Underlying scenario architecture for SSP-RCP combinations used in physical-risk modelling.

Methodology and honest-gap sources
– Continuuiti, Climate Risk Methodology. NASA NEX-GDDP-CMIP6 single-climate-model approach with automatic fallback, FABDEM bare-earth elevation (Hawker et al. 2022) used in preference to SRTM (which reports 5-25 metres higher in urban areas), 12-hazard rating, model limitations.
– Continuuiti, Flood Depth Methodology. JRC CEMS GloFAS v2.1 baseline + WRI Aqueduct Flood V2 climate-projection ratio method, riverine + coastal coverage, 7 quality flags (the ‘jrc_artifact’ flag captures SRTM-bias cases of identical depths across all return periods).
– Hawker, L., Uhe, P., Paulo, L., Sosa, J., Savage, J., Sampson, C., & Neal, J. (2022). A 30 m global map of elevation with forests and buildings removed (FABDEM). Environmental Research Letters, 17(2), 024016. DOI: 10.1088/1748-9326/ac4d4f.

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Frequently asked questions

Which 8 industries does IFRS S2 hand a prescribed physical-risk threshold to?

Real Estate, Mortgage Finance, Water Utilities and Services, Hotels and Lodging, Insurance, Health Care Delivery, Managed Care, and Forestry Management. The IFRS Foundation’s Industry-based Guidance carries an XX-XX-450a Climate Change Adaptation topic code in each. Five carry quantitative metrics; three carry discussion-only metrics. Para 32 routes preparers in these industries to those metrics.

What is the IBG-450a metric and how does it relate to Para 29(c)?

The IBG-450a metric is a sector-specific Climate Change Adaptation disclosure required by Para 32. It specifies the threshold (typically the 100-year flood zone), the unit (floor area, loan value, capacity, facility count, or worst-case loss), and the segmentation. Para 29(c) is the cross-industry physical-risk disclosure that asks for amount and percentage of assets vulnerable. For these 8 industries, IBG-450a is the sector-specific numerator and Para 29(c) is the universal percentage-of-carrying-amount denominator. Both are required, not interchangeable.

What is the RP100 (100-year flood zone) threshold?

A 100-year flood zone is land subject to a 1% or greater chance of flooding in any given year, also called the 1% annual exceedance probability flood. The IFRS Foundation’s Industry-based Guidance defines this verbatim across four sectors (Real Estate, Mortgage Finance, Water Utilities, Hotels), making RP100 a convergent disclosure threshold despite different underlying business models. Insurance is the outlier; it uses Probable Maximum Loss at 1-in-50, 1-in-100, and 1-in-250 likelihoods instead.

How do you reconcile IEA World Energy Outlook scenarios with SSP-RCP physical-risk modelling?

A defensible position is two-source. Use SSP-RCP combinations from CMIP6 (or NGFS scenarios) for the IBG-450a numerator construction, because the underlying hazard projections are produced under those scenario sets. Cite IEA WEO compliance separately via the narrative metric (IF-RE-450a.2 for Real Estate). The two scenario sets answer different questions for the same disclosure: one is energy-policy-pathway, the other is physical-hazard-projection.

Should an IBG-450a sector preparer disclose only the IBG-450a metric or both IBG-450a and Para 29(c)?

Both. Para 32 says the entity shall disclose industry-based metrics in addition to, not instead of, the cross-industry metric categories in Para 29. A common error in first-wave practice is treating the IBG-450a metric as a substitute for Para 29(c). It is not. The two metrics tell different stories. IBG-450a tells investors what fraction of physical assets are in a defined hazard exposure zone; Para 29(c) tells them what fraction of book-value carrying amount is vulnerable. Both should anchor to the same scenario, horizon, and threshold pick.