The Corporate Sustainability Reporting Directive (CSRD) and the International Sustainability Standards Board (ISSB) both require companies to disclose climate-related risks. They share common DNA through the TCFD framework. Yet the two standards differ in fundamental ways that determine what companies report, to whom, and under what enforcement. CSRD vs ISSB is a question of which framework applies to your entity and whether you can satisfy both with a single data strategy.
CSRD vs ISSB at a Glance
| Dimension | CSRD (EU) | ISSB (Global) |
|---|---|---|
| Materiality | Double materiality (financial + impact) | Single materiality (financial only) |
| Scope | ~10,000 EU companies (post-Omnibus: 1,000+ employees and EUR 1.5B+ turnover) | 100,000+ globally via jurisdictional adoption (UK, Australia, Singapore) |
| Physical risk metric | ESRS E1-2 and E1-11: hazard screening with documented methodology, carrying amount of exposed assets | IFRS S2 Para 29(c): amount and percentage of assets vulnerable to physical risks |
| Scenario analysis | Mandates high-emissions (>2C) + Paris-aligned (1.5C) scenarios | Entity selects a “diverse range” of scenarios |
| Assurance | Limited assurance mandated (from October 2026) | Varies by jurisdiction; no global mandate |
| Enforcement | EU law with penalties; legally binding | Voluntary global baseline; binding only where jurisdictions adopt it |
| Geographic focus | EU-based and non-EU companies with EU revenue above thresholds | Global; adopted by UK (Jan 2027), Australia (2025+), Singapore, and growing |
The most consequential distinction is in materiality.
How Materiality Differs
CSRD applies double materiality assessment. Companies must evaluate two questions simultaneously: how do climate risks affect our financial position (outside-in), and how do our operations affect the environment and people (inside-out)? ISSB applies single materiality, asking only the first question: does a sustainability matter affect enterprise value?
The practical difference shows up quickly. A logistics company with coastal warehouses faces financial exposure from flooding under both frameworks. Under CSRD, that same company must also report whether its diesel fleet contributes to climate change, regardless of whether that creates financial risk. Under ISSB, fleet emissions only matter if they threaten the company’s own value through regulation, litigation, or market shifts. If no such threat exists, ISSB does not require the disclosure.
Physical Risk Disclosure Requirements
Physical risk is where CSRD vs ISSB requirements converge most closely and where the data demands are most concrete. Both frameworks require companies to identify which assets face climate-related physical hazards and quantify that exposure. The mechanisms differ.
ESRS E1-2: Hazard Screening With Documented Methodology
Under the amended ESRS E1-2, companies must identify physical climate risks using documented data sources, screen across hazard types, and run scenario analysis with at least one high-emissions scenario. The standard demands methodology transparency: what data did you use, how did you screen, and what assumptions did you make? ESRS E1-11 then requires disclosure of the carrying amount of materially exposed assets before adaptation measures and the percentage of those assets covered by adaptation actions.
IFRS S2 Para 29(c): Assets Vulnerable to Physical Risks
IFRS S2 takes a different approach. Paragraph 29(c) requires a cross-industry metric: the amount and percentage of assets or business activities vulnerable to climate-related physical risks. The standard is less prescriptive about methodology. It specifies what to disclose (asset vulnerability) but gives entities more flexibility in how they arrive at that figure. Appendix B guidance recommends proportionate effort based on exposure level.
| Requirement | ESRS E1-2 / E1-11 | IFRS S2 Para 29(c) |
|---|---|---|
| What to disclose | Carrying amount of exposed assets + % covered by adaptation | Amount and % of assets vulnerable to physical risks |
| Methodology | Data sources, screening methodology, and assumptions must be disclosed | Entity-determined; proportionate to exposure level |
| Scenario mandate | High-emissions (>2C) + Paris-aligned (1.5C) required | “Diverse range” including a Paris-aligned scenario |
| Hazard scope | Cross-hazard screening mandate | Acute and chronic risks identified per Appendix A |
Both ESRS E1 disclosure requirements and IFRS S1 and S2 requirements point to the same underlying data need: physical risk assessment at the asset level, across multiple hazards and scenarios. The data requirements overlap significantly. Platforms like Continuuiti provide 12-hazard physical risk assessment under SSP scenarios that satisfies both the ESRS E1-2 screening mandate and the IFRS S2 Para 29(c) asset vulnerability metric, allowing
Both frameworks ask the same question with one wrinkle: ESRS E1-9 requires a “before adaptation” presentation, while IFRS S2 Paragraph 29(c) is silent on adaptation framing. The four definitional questions of Paragraph 29(c) apply under either standard.
companies subject to both frameworks to source physical risk data once.
Scenario Analysis: Mandated vs Flexible
CSRD mandates that companies run at least two climate scenarios: one Paris-aligned (1.5C or no-overshoot) and one high-emissions pathway above 2C. ISSB gives entities discretion to select a “diverse range of scenarios” appropriate to their circumstances, though a Paris-aligned scenario is encouraged. Australia’s AASB S2 took the prescriptive route further, legislating that scenarios must include a pathway “well exceeding 2C.” For a detailed comparison of scenario analysis requirements across frameworks, including CDP and TCFD alignment, see our dedicated guide.
Scope, Timeline, and Enforcement
CSRD is European Union law. Following the Omnibus simplification package approved in late 2025, the scope narrowed to approximately 10,000 companies: those with 1,000 or more employees and EUR 1.5 billion or more in turnover. Non-EU companies with EU operations generating revenue above these thresholds also fall within scope. Reporting is mandatory, third-party assurance is required from October 2026, and penalties apply for non-compliance. For the full timeline and threshold details, see our CSRD climate risk disclosure guide.
ISSB operates differently. The standards are voluntary at the global level. The ISSB publishes IFRS S1 and S2 as a baseline that jurisdictions then choose to adopt, often with local modifications. Adoption is accelerating:
- United Kingdom: UK Sustainability Reporting Standards endorsed February 2026, proposed mandatory from January 2027 for FCA-listed companies
- Australia: AASB S2 mandatory from financial year 2025 for the largest companies, phased through 2027
- Singapore: SGX incorporating IFRS S2 into listing rules, MAS aligning financial sector guidance
- CDP: Aligned its 2025 climate questionnaire with IFRS S2, extending reach to over 23,000 disclosing companies
The result is a patchwork. A multinational corporation headquartered in the EU with operations in Australia, the UK, and Singapore could face CSRD, AASB S2, UK SRS, and SGX requirements simultaneously. The physical risk data needs overlap substantially across all four, even where the materiality lens, assurance requirements, and reporting formats diverge.
Can You Report Under Both Frameworks?
Yes. EFRAG published interoperability guidance in May 2024 mapping where CSRD and ISSB requirements align. The overlap is substantial for climate-related disclosures. Physical risk data, scenario analysis inputs, GHG emissions metrics, and governance disclosures can all serve both frameworks with minimal duplication.
The divergence occurs in three areas. First, impact materiality: CSRD requires assessment of how your operations affect the environment, which ISSB does not. Second, topical breadth: CSRD covers pollution, water, biodiversity, circular economy, and social topics through ESRS E2 through S4, while ISSB’s S2 is limited to climate. Third, assurance rigor: CSRD’s mandatory limited assurance (with reasonable assurance planned) exceeds what most ISSB-adopting jurisdictions currently require.
For physical risk specifically, a single platform assessment can satisfy both frameworks. The hazard screening and asset vulnerability data overlap almost entirely. Companies subject to both CSRD and ISSB can build their physical risk data layer once and map the outputs to each framework’s disclosure format.
Frequently Asked Questions
What is the difference between ISSB and CSRD standards?
The most fundamental difference is the materiality lens. CSRD applies double materiality, requiring companies to report both how climate risks affect their finances and how their operations affect the environment. ISSB applies single materiality, focusing only on risks that affect enterprise value. CSRD is mandatory EU law with penalties, while ISSB is a voluntary global baseline that jurisdictions adopt individually.
Are IFRS and ISSB the same?
Not exactly. The ISSB (International Sustainability Standards Board) is a board within the IFRS Foundation that issues sustainability disclosure standards. IFRS S1 and IFRS S2 are the specific standards the ISSB has published. IFRS S1 covers general sustainability disclosures, while IFRS S2 covers climate-related disclosures specifically.
Is CSRD still relevant after the Omnibus simplification?
Yes. The Omnibus simplification package reduced CSRD’s scope from approximately 50,000 companies to around 10,000 by raising the thresholds. It also reduced mandatory ESRS data points by 60-70%. However, CSRD remains legally binding EU law for in-scope companies, and the core climate disclosure requirements under ESRS E1 remain substantive.
What is CSRD replacing?
CSRD replaces the Non-Financial Reporting Directive (NFRD), which applied to approximately 11,000 large EU public-interest entities. CSRD expands the scope, introduces mandatory reporting standards (ESRS), requires third-party assurance, and demands digital tagging in XBRL format.
Can a company report under both CSRD and ISSB?
Yes. EFRAG published interoperability guidance in May 2024 mapping the overlap. Climate disclosures such as physical risk data, scenario analysis, GHG metrics, and governance processes align closely. The main divergence is impact materiality (CSRD only), topical breadth beyond climate, and assurance requirements.
Which framework requires double materiality?
CSRD requires double materiality through the European Sustainability Reporting Standards (ESRS). Companies must assess both financial materiality and impact materiality. ISSB uses single materiality, focusing only on the financial perspective. For a detailed explanation, see our guide to double materiality assessment.
