IFRS S1 and S2: What They Require and Who Must Comply

IFRS S1 and S2 are the most widely adopted global baseline for sustainability disclosure. Issued in June 2023 by the International Sustainability Standards Board (ISSB), the two standards are now used by more than 45 jurisdictions, according to the IFRS Foundation. IFRS S1 covers general sustainability-related financial disclosures, while IFRS S2 focuses specifically on climate. Together, they replace the TCFD recommendations and create a single, investor-focused reporting framework.

What Is IFRS S1 and S2?

Standard	Purpose
IFRS S1	General Requirements for Disclosure of Sustainability-related Financial Information
IFRS S2	Climate-related Disclosures

IFRS S1 sets the foundation. It requires companies to disclose all sustainability-related risks and opportunities that could reasonably affect their cash flows, access to finance, or cost of capital. The standard does not list which sustainability topics to cover. It requires companies to consider the disclosure topics in the SASB Standards, and it allows them to use the CDSB Framework Application Guidance for water and biodiversity.

IFRS S2 narrows the lens to climate. It requires specific disclosures about physical risks, transition risks, climate-related opportunities, greenhouse gas emissions, and scenario analysis. The standard draws heavily from the TCFD recommendations and is accompanied by industry-based guidance drawn from SASB.

The ISSB was established at COP26 in November 2021 under the IFRS Foundation. Over the following two years, it consolidated several existing sustainability disclosure bodies: CDSB integrated in January 2022, the Value Reporting Foundation (which had absorbed SASB) consolidated in August 2022, and the IFRS Foundation took over the TCFD’s monitoring role from 2024 after the task force completed its work in October 2023. The board consulted on its exposure drafts from March to July 2022 and issued both standards on 26 June 2023. One month later, the International Organization of Securities Commissions (IOSCO) endorsed IFRS S1 and S2 and called on its 130 member jurisdictions to consider how to bring them into their regulatory frameworks.

Any entity applying IFRS S2 must also apply IFRS S1. The climate standard cannot stand alone. S1 provides the general architecture, and S2 plugs into it with climate-specific requirements. For more on how the ISSB standards fit together, see our detailed guide.

What Is the Difference Between IFRS S1 and S2?

IFRS S1 and S2 share the same four-pillar structure and serve different functions. S1 is the umbrella. S2 is the climate-specific module that sits underneath it. The table below breaks down the key differences.

Dimension	IFRS S1	IFRS S2
Full name	General Requirements for Disclosure of Sustainability-related Financial Information	Climate-related Disclosures
Scope	All sustainability-related risks and opportunities	Climate-related risks and opportunities only
Materiality	Financial materiality (investor-focused)	Financial materiality (investor-focused)
Disclosure framework	Four pillars (Governance, Strategy, Risk Management, Metrics & Targets)	Same four pillars with climate-specific requirements
Industry guidance	Refers to SASB Standards and CDSB Framework	Accompanied by industry-based guidance covering 68 industries (SASB-derived), with industry-specific climate metrics, disclosure topics, and activity metrics
Scenario analysis	Not required	Required for climate resilience assessment
Cross-industry metrics	None specified	7 cross-industry metrics (GHG, transition risks, physical risks, opportunities, capital deployment, internal carbon price, remuneration)
GHG emissions	Not specified	Scope 1, 2, and 3 (with phase-in relief for Scope 3)
Relationship	Standalone general standard	Cannot be applied without also applying S1
Effective date	Annual periods beginning on or after 1 January 2024	Annual periods beginning on or after 1 January 2024

IFRS S2 cannot be applied without S1. A company that wants to report only on climate must still build the general disclosure infrastructure that S1 requires. The four pillars, the materiality assessment process, and the connected financial statement disclosures all flow from S1.

S2 adds two layers that S1 does not: mandatory scenario analysis and seven cross-industry metric categories, starting with GHG emissions across Scopes 1, 2 and 3. These additions build on the TCFD recommendations, which companies had used since 2017.

The Four Pillars of IFRS S1 and S2

Both standards are organized around four disclosure pillars. These pillars originated from the TCFD framework, which the Financial Stability Board set up in 2015 and which published its recommendations in 2017. The TCFD disbanded in October 2023, the IFRS Foundation took over its monitoring role from 2024, and the four pillars carried into the ISSB Standards.

Pillar	IFRS S1 (General)	IFRS S2 (Climate)
Governance	Board and management oversight of sustainability risks and opportunities	Board and management oversight of climate risks specifically, including competencies and reporting frequency
Strategy	How sustainability risks affect business model, value chain, financial position, and decision-making	Climate-specific strategy impacts, transition plans, scenario analysis for resilience testing
Risk Management	Processes for identifying, assessing, prioritizing, and monitoring sustainability risks	Processes to identify, assess, prioritise and monitor climate risks, the data sources used, and how they feed overall risk management
Metrics & Targets	Quantitative and qualitative metrics used to measure and manage sustainability risks	7 cross-industry metric categories (including Scope 1, 2 and 3 GHG emissions), industry-based metrics, climate targets and progress

Under S1, each pillar applies broadly. A company might disclose governance processes for water risk, biodiversity, or human capital. Under S2, each pillar narrows to climate and adds prescriptive detail. For example, Strategy under S2 includes a mandatory climate resilience assessment using scenario analysis, something S1 does not require for other sustainability topics.

Governance Under IFRS S1 and S2 (S2 Paragraphs 5-7)

Companies must describe how their board or equivalent governing body oversees climate-related risks. The standard asks about specific governance mechanisms: whether climate responsibilities appear in board mandates, how often the board receives climate risk briefings, and whether executive remuneration is linked to climate targets. Boards also need to demonstrate that they have the skills and competencies to oversee climate risks effectively.

Strategy (S2 Paragraphs 8-23)

The strategy pillar is the most detailed section of IFRS S2. Companies must identify their climate-related risks and classify each one as either a physical risk or a transition risk. They need to specify the time horizons over which each risk could affect the business and explain how those risks affect the business model, value chain, and financial position. Paragraph 22 requires companies to assess their climate resilience through scenario analysis.

Risk Management (S2 Paragraphs 24-26)

Companies describe the processes they use to identify, assess, prioritize, and monitor climate risks. The standard specifically asks about input parameters and data sources used in risk assessment, how climate risks are prioritized against other business risks, and how climate risk management integrates with the company’s overall enterprise risk management framework.

Metrics and Targets (S2 Paragraphs 27-37)

Paragraph 29 defines seven cross-industry metric categories that apply in every sector, subject to materiality. These cover greenhouse gas emissions (Scope 1, 2 and 3, with first-year relief for Scope 3) and the amount and percentage of assets vulnerable to climate-related transition risks and to climate-related physical risks (see our IFRS S2 disclosure examples by sector). They also cover the amount aligned with climate-related opportunities, capital deployed toward climate-related risks and opportunities, internal carbon prices, and how climate considerations factor into executive remuneration. Companies also consider the industry-based metrics in the guidance that accompanies IFRS S2.

Companies reporting under IFRS S1 and S2 should map their existing TCFD disclosures to these pillars as a starting point. The structure is nearly identical. The TCFD recommendations were voluntary, and some regulators built rules on them, such as the UK’s comply-or-explain listing rules. The ISSB Standards take effect through each jurisdiction’s own rules. The pillars set what to cover, and neither standard sets a template or a section order for them. Our guide to IFRS S2 disclosure format and structure covers where each disclosure can sit in the report.

Does IFRS S2 Require Scenario Analysis?

Yes. Paragraph 22 requires every entity to assess its climate resilience using scenario analysis. The standard specifies what companies must disclose about both the results and the methodology.

On the results side, companies describe how their strategy and business model would need to adapt under different climate outcomes. They also disclose significant areas of uncertainty and their capacity to adjust, including whether existing financial resources are flexible enough to respond, whether assets can be redeployed or decommissioned, and how current investments in climate adaptation contribute to resilience.

On the methodology side, the standard requires detailed disclosure of inputs and assumptions. Companies must explain which scenarios they selected, whether those scenarios cover both physical and transition risks, and whether a Paris-aligned scenario (targeting 1.5 to 2 degrees Celsius of warming) was included. They also disclose the time horizons used, the scope of operations covered, and key assumptions about climate policies, macroeconomic trends, energy mix, and technology development.

For an analytical walkthrough of Paragraph 22’s input/output structure and the disclosures auditors look for, see our Paragraph 22 scenario analysis breakdown.

Requirement	IFRS S2 Reference	What to Disclose
Resilience assessment	Paragraph 22(a)	How strategy and business model would adapt
Scenario selection	Paragraph 22(b)(i)(1-2)	Which scenarios were used, and whether they cover a diverse range
Paris alignment	Paragraph 22(b)(i)(4)	Whether a Paris-aligned scenario was included
Time horizons	Paragraph 22(b)(i)(6)	Short, medium, and long-term periods
Key assumptions	Paragraph 22(b)(ii)	Policy, macro trends, energy mix, technology
Scope of operations	Paragraph 22(b)(i)(7)	Locations and business units included

The application guidance (Paragraphs B1 through B18) clarifies that the approach should be “commensurate with the entity’s circumstances.” A company with high exposure to climate risks and access to the skills, capabilities and resources it needs must use a more advanced quantitative approach (paragraph B17). Qualitative approaches combined with quantitative inputs are acceptable where that is commensurate, and an entity may start with a simpler approach and build its capabilities through experience (paragraph B17). The standard expects scenario analysis capabilities to develop iteratively over time.

For guidance on choosing scenarios, see our guide to climate scenario analysis covering SSP, RCP, and NGFS climate scenarios. For a cross-framework comparison of climate scenario analysis requirements across IFRS S2, CSRD, CDP, and other frameworks, see our framework-by-framework guide.

Are IFRS S1 and S2 Mandatory?

The ISSB itself does not have enforcement power. It sets the global baseline, and each jurisdiction decides whether to make the standards mandatory, voluntary, or modified. As of October 2026, several major economies require IFRS S1 and S2-based disclosures, and others apply them on a comply-or-explain or voluntary basis.

The United Kingdom endorsed UK SRS S1 and S2 on 25 February 2026. The Financial Conduct Authority published its final rules in Policy Statement PS26/19 on 30 September 2026. UK-listed companies report against UK SRS S1 and S2 on a comply-or-explain basis for accounting periods starting on or after 1 January 2027, with first reports in 2028, and with a one-year relief for Scope 3 and a two-year relief for wider UK SRS S1 disclosures.

Australia moved faster: AASB S2 became mandatory for Group 1 entities for financial years beginning on or after 1 January 2025. Group 1 covers listed and unlisted entities that meet two of three size tests (consolidated revenue of AUD 500 million or more, gross assets of AUD 1 billion or more, 500 or more employees), plus NGER reporters whose group emits 50,000 tCO2-e or more. Group 2 followed from 1 July 2026, and Group 3 follows from 1 July 2027. AASB S1 remains voluntary. Singapore requires all SGX-listed companies to report Scope 1 and 2 emissions from financial year 2025, with fuller IFRS S2-based disclosures phased in from FY2025 for the largest companies.

Japan has mandated SSBJ Standards for its largest Prime Market companies from periods ending March 2027. Canada’s standards remain voluntary while securities regulators pause their rule. Brazil made reporting voluntary in May 2026, and from 2027 a listed company that does not file must explain why.

Which Countries Have Adopted IFRS S1 and S2?

The table below summarises jurisdictions that have adopted the ISSB standards or set a timeline for them, as of October 2026.

Jurisdiction	Standard Adopted	Effective Date	Mandatory?	Applies To
United Kingdom	UK SRS S1 & S2	Periods from 1 January 2027; first reports in 2028	Comply or explain	UK-listed companies
Australia	AASB S2 (AASB S1 voluntary)	Financial years from 1 January 2025 (Group 1), 1 July 2026 (Group 2), 1 July 2027 (Group 3)	Yes	Large listed and unlisted entities, NGER reporters and large asset owners (phased by size)
Singapore	SGX climate reporting (IFRS S2-based)	FY2025 (Scope 1 and 2 for all listed issuers; full disclosures for STI constituents); later years for others	Yes (phased)	SGX-listed companies; large non-listed companies from FY2030
Japan	SSBJ Standards	Periods ending March 2027 (market cap ¥3 trillion or more), phased to ¥500 billion by March 2029	Yes (phased)	Prime Market listed companies
Canada	CSSB CSDS 1 & 2	Available since 1 January 2025	Voluntary (securities regulators’ rule paused)	Any entity
Brazil	CBPS 01 & 02 (CVM Resolution 193, as amended)	Voluntary; explanation required from 2027 if a listed company does not file	No (voluntary with explanation)	Publicly held companies
Hong Kong	HKEX climate reporting	January 2025 (Scope 1 and 2 for all issuers; other items comply or explain); LargeCap mandatory from 2026	Phased	HKEX-listed companies
Nigeria	IFRS S1 & S2 (FRC roadmap)	Periods beginning 1 January 2028 (SMEs from 2030)	Yes	Public interest entities, including listed entities
South Korea	KSSB sustainability standards	2028 (FY2027) for KRW10 trillion+ assets; 2029 for KRW5 trillion+	Yes (final roadmap; law change pending)	KOSPI-listed companies
Malaysia	IFRS S1 & S2 (Bursa listing rules; national framework for non-listed)	Phased from 2025 (Main Market issuers with RM2 billion+ market cap) to 2027	Yes (phased)	Main Market and ACE Market listed companies; large non-listed companies
Turkey	Turkish Sustainability Reporting Standards (TSRS)	Periods from 1 January 2024	Yes	Listed entities, financial institutions and entities above size thresholds
Kenya	IFRS S1 & S2 (ICPAK roadmap)	1 January 2027 (public interest entities); 2028 large entities; 2029 SMEs	Yes (phased)	Public interest entities, then large entities and SMEs

The European Union uses its own framework, the Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS), and has not adopted IFRS S1 and S2 directly. The IFRS Foundation and EFRAG have published interoperability guidance to help companies reporting under both. For details on the EU approach, see our guide to CSRD climate risk disclosure.

Key Milestones

Date	Milestone
November 2021	ISSB established at COP26 in Glasgow
March 2022	Exposure drafts for S1 and S2 published for public consultation
June 2023	IFRS S1 and S2 formally issued
July 2023	IOSCO endorses both standards, calls on 130 member jurisdictions to consider bringing them into their rules
October 2023	TCFD publishes its final status report and disbands; the IFRS Foundation takes over monitoring from 2024
January 2025	Australia (Group 1) begins mandatory reporting; Hong Kong listed issuers report Scope 1 and 2, with other items on a comply-or-explain basis
December 2025	ISSB issues targeted amendments to the IFRS S2 GHG requirements (Scope 3 Category 15, industry classification, GWP values), effective 2027
July 2026	Australia (Group 2) begins mandatory reporting under AASB S2
January 2027	UK listed-company rules apply (comply or explain) and Kenya’s public interest entities begin mandatory reporting

For the full text of the standards, see the IFRS S1 standard page on the IFRS Foundation website.

IFRS S2 vs TCFD: What Changed?

IFRS S2 incorporates the TCFD’s four core recommendations and eleven recommended disclosures. A company that fully complies with IFRS S2 automatically satisfies TCFD requirements. The standard also adds requirements that go beyond the TCFD recommendations.

Paragraph 29(c) turns a metric the TCFD suggested in its 2021 guidance into a requirement: the amount and percentage of assets or business activities vulnerable to climate-related physical risks. IFRS S2 also requires companies to refer to and consider industry-based metrics, to disclose planned use of carbon credits toward net emissions targets, and, for financial institutions, to give more detail on financed emissions.

The other major shift is status. The TCFD task force completed its work in October 2023, publishing its final status report. The Financial Stability Board transferred monitoring responsibilities to the IFRS Foundation, which assumed that role from 2024. TCFD was a voluntary recommendation. IFRS S2 takes effect through each jurisdiction’s own rules, which make it mandatory in some places and comply-or-explain or voluntary in others. For a full comparison of the two frameworks, see our TCFD vs ISSB guide.

Area	TCFD	IFRS S2
Status	Voluntary (task force completed October 2023)	Applies through each jurisdiction’s rules
Industry metrics	Not required	Required to consider (industry-based guidance)
Scope 3 emissions	Recommended	Required (first-year relief)
Carbon credits	Not covered	Disclosure required
Physical risk metric	Suggested metric (2021 guidance)	Quantitative: amount and % of assets
Scenario analysis	Recommended	Required (Paragraph 22)
Financed emissions	Supplemental guidance	Required for financial institutions

The IFRS Foundation publishes a detailed IFRS S2 to TCFD comparison table that maps every TCFD recommendation to its IFRS S2 equivalent.

IFRS S2 Physical Risk Requirements

IFRS S2 requires companies to identify and disclose climate-related physical risks across two categories.

Category	Definition	Examples
Acute	Event-driven hazards, such as storms, floods, drought or heatwaves	Floods, cyclones, wildfires, heatwaves, storm surge
Chronic	Longer-term shifts in climatic patterns, such as changes in precipitation and temperature	Sea level rise, sustained temperature increases, water stress, permafrost thaw

Paragraph 10 of IFRS S2 requires companies to describe the climate risks they have identified, say whether each one is a physical or a transition risk, and specify the time horizons over which they expect impacts (short, medium, or long term). Paragraph 13(b) asks where those risks are concentrated, for example by geographical area, facility or type of asset. For an entity with a global asset portfolio, this means mapping each location to the physical hazards relevant to that region.

Paragraph 22 requires climate resilience assessment through scenario analysis. Companies disclose which scenarios they used and whether one of them was aligned with the latest international agreement on climate change (the Paris Agreement’s 1.5 to 2 degrees Celsius pathway). The approach must be “commensurate with the entity’s circumstances,” meaning it depends on how exposed the company is and on the skills and resources it has. A company with a high degree of exposure to climate risk, and with access to the skills, capabilities or resources to run a quantitative analysis, is required to use one (paragraphs B2 and B17).

Paragraph 29(c) is the most data-demanding metric: companies must disclose the “amount and percentage of assets or business activities vulnerable to climate-related physical risks.” Reporting this accurately requires asset-level physical risk data across multiple hazards and time horizons. For eight specific industries, the Industry-based Guidance that accompanies IFRS S2 sets out additional physical-risk metrics that define exact thresholds and disclosure units. In our read of six first-wave IFRS S2 reports, five disclosed no quantified physical-risk amount. For a detailed breakdown of hazard types, see our physical climate risk assessment guide.

How to Prepare for IFRS S2 Compliance

Getting ready for a first report means a set of early decisions: which first-year reliefs to take, the reporting boundary, the timetable, materiality, scenario analysis, the link to the financial statements and the evidence an assurer will ask for. Our IFRS S2 readiness guide takes a first-year preparer through each one, with the questions to answer at every step.

Paragraph 29(c) requires the amount and percentage of assets vulnerable to physical risks. Meeting that requirement starts with hazard identification across your locations, scenario-based projections for how those hazards change over time, and financial quantification of potential exposure. Platforms like Continuuiti address IFRS S2’s physical risk requirements by assessing 12 climate hazards across multiple SSP scenarios and time horizons, providing the structured hazard data and flood damage estimates that feed into Paragraph 29(c) asset vulnerability disclosures and Paragraph 22 climate resilience assessments.

For teams building the physical-risk data layer required by Paragraph 29(c), see the Climate Risk API documentation, which exposes 12 hazards across multiple scenarios and time horizons at any global coordinate.

For a worked example of a complete IFRS S2 disclosure in one sector, see our banking sector sample.

Paragraph 29(c) hides four definitional choices in one sentence: amount of what, percentage of what denominator, vulnerable under what scenario / horizon / hazard / threshold, and assets in what scope. The full walkthrough of Paragraph 29(c) covers each.

Frequently Asked Questions

What is IFRS S1 and IFRS S2?

IFRS S1 is a global standard that requires companies to report sustainability risks affecting their finances. IFRS S2 adds climate-specific requirements on top of S1, including greenhouse gas emissions and scenario analysis. Together, they give investors a clear picture of how sustainability and climate risks could affect a company’s future cash flows and business value.

What are the four pillars of IFRS S1 and S2?

Both standards are built on four pillars: Governance (board oversight), Strategy (business model impacts including transition plans and scenario analysis), Risk Management (identification and monitoring processes), and Metrics and Targets (quantitative measurements, including the seven cross-industry metric categories). Under S2, each pillar adds climate-specific disclosures: governance describes board oversight of climate risks, strategy includes transition plans and Paragraph 22 climate resilience scenario analysis, risk management covers physical and transition risk identification, and metrics and targets includes the seven Paragraph 29 cross-industry metric categories, starting with Scope 1, 2 and 3 GHG emissions.

Are IFRS S1 and S2 mandatory?

The ISSB standards are voluntary at the global level. However, individual jurisdictions make them legally binding through local adoption. Australia, Singapore and Hong Kong already require ISSB-aligned reporting, with Hong Kong applying comply or explain to most items. UK-listed companies report against UK SRS on a comply-or-explain basis from periods starting 1 January 2027. Brazil made reporting voluntary in 2026, with an explanation required from 2027 when a listed company does not file. Nigeria requires public interest entities to apply the standards from 1 January 2028. Check your local securities regulator for applicable requirements.

Who does IFRS S1 and S2 apply to?

The standards are designed for entities that prepare general purpose financial reports for investors, lenders, and creditors. In practice, adopting jurisdictions typically apply them to listed companies first, then phase in requirements for large private companies and financial institutions. The exact scope varies by country and usually depends on company size and listing status.

What is the key difference between IFRS S1 and IFRS S2?

IFRS S1 covers all sustainability topics (water, biodiversity, human capital, and more) at a general level. IFRS S2 focuses exclusively on climate and adds specific requirements for scenario analysis and seven cross-industry metric categories, including GHG emissions. Any entity applying S2 must also apply S1, because S1 provides the underlying disclosure architecture.

What is the IFRS S1 and S2 effective date?

The ISSB set an effective date of annual reporting periods beginning on or after 1 January 2024. However, the actual compliance date depends on when each jurisdiction adopts the standards into local law. Australia started with financial years beginning on or after 1 January 2025 for its largest entities, and a second group joined from 1 July 2026. The UK rules apply to periods starting in 2027, and Japan’s largest companies report for periods ending March 2027. Most jurisdictions include phase-in provisions based on company size.

What are the cross-industry metrics under IFRS S2?

Paragraph 29 requires seven cross-industry metric categories:

1. Greenhouse gas emissions across Scope 1, 2, and 3 with measurement methodology.
2. The amount and percentage of assets or business activities vulnerable to climate-related transition risks.
3. The amount and percentage of assets or business activities vulnerable to climate-related physical risks.
4. The amount and percentage of assets or business activities aligned with climate-related opportunities.
5. Capital expenditure, financing, or investment deployed toward climate-related risks and opportunities.
6. Internal carbon prices used in decision-making.
7. Whether and how climate-related considerations are factored into executive remuneration.

Is IFRS S2 the same as TCFD?

No. IFRS S2 incorporates the TCFD’s eleven recommended disclosures, so a company applying IFRS S2 provides all the information the TCFD recommendations cover. IFRS S2 also adds requirements: industry-based metrics, planned use of carbon credits, more detail on financed emissions, and a binding requirement to report the amount and percentage of assets or business activities vulnerable to climate-related physical risks (Paragraph 29(c)).

What is Paragraph 29(c) and why is it the hardest IFRS S2 disclosure?

Paragraph 29(c) requires companies to disclose “the amount and percentage of assets or business activities vulnerable to climate-related physical risks.” It is one of seven cross-industry metric categories under Paragraph 29 of IFRS S2.

The disclosure looks like a single number, and it hides four definitional choices: (1) amount of what (book value, replacement cost, exposure value), (2) percentage of what denominator (total assets, asset class, business segment), (3) vulnerable under what (scenario, time horizon, hazard, threshold), and (4) assets in what scope (own operations, value chain, geographic concentration).

Each of those four questions has multiple defensible answers, and the standard does not pick one. Companies must disclose the choices they made and explain why. For a paragraph-by-paragraph walkthrough of how to construct a defensible Paragraph 29(c) disclosure, see our Paragraph 29(c) breakdown.

Does IFRS S2 require asset-level physical risk data?

IFRS S2 never uses the phrase “asset-level data”, and its requirements effectively demand that level of data for several disclosures. Paragraph 29(c) requires the amount and percentage of assets vulnerable to physical risks, which cannot be calculated without per-asset hazard exposure data. Paragraph 22(b)(i) requires disclosure of the scope of operations covered by scenario analysis, which forces companies to specify which locations, business units, or asset classes were assessed. Paragraph 10 requires companies to identify their climate risks, and paragraph 13(b) asks where those risks are concentrated by area, facility or type of asset.

In practice, meeting these requirements means mapping each asset (or each material location) to the climate hazards relevant to its location, across scenario and time-horizon combinations specified in your scenario analysis. Companies with concentrated portfolios may be able to meet the requirements with location-level data; companies with distributed asset bases typically need automated asset-level assessment platforms. The Continuuiti Climate Risk API exposes 12 hazards across multiple SSP scenarios and time horizons at any global coordinate, supporting Paragraph 29(c) numerator construction and Paragraph 22 scope-of-operations disclosure.

What climate scenarios should we use for IFRS S2 scenario analysis?

IFRS S2 Paragraph 22 does not prescribe specific scenarios. It requires entities to use an approach to scenario analysis that is commensurate with their circumstances and to disclose which scenarios were used, whether they cover transition or physical risks, and whether one of them was aligned with the latest international climate agreement.

In practice, three scenario families dominate IFRS S2 disclosures:

• NGFS scenarios (Network for Greening the Financial System): Phase V (November 2024) has seven scenarios: Net Zero 2050, Below 2°C, Low Demand, Delayed Transition, Nationally Determined Contributions, Current Policies and Fragmented World. The NGFS has flagged a retracted study behind some Phase V physical-loss estimates and plans a new release at the end of 2026. Used heavily by financial institutions because they integrate transition and physical pathways.
• IPCC Shared Socioeconomic Pathways (SSP) and Representative Concentration Pathways (RCP): SSP1-2.6, SSP2-4.5, SSP5-8.5 (and the older RCP equivalents) are the standard inputs for asset-level physical hazard projections. NASA’s NEX-GDDP-CMIP6 downscaled collection covers SSP1-2.6, SSP2-4.5, SSP3-7.0 and SSP5-8.5.
• IEA World Energy Outlook scenarios (Current Policies, Stated Policies and Net Zero Emissions by 2050 in the 2025 edition): used primarily for transition-risk modelling in energy-intensive sectors.

For the analytical structure of Paragraph 22 scenario disclosure (the input/output split, what auditors look for, and where reporters most often skip), see our Paragraph 22 walkthrough.

Do private companies need to comply with IFRS S2?

It depends on the jurisdiction. The ISSB sets the standards, and each jurisdiction decides whether to make them mandatory and whether to extend them beyond listed companies. Some examples of how this varies as of October 2026:

• Australia (AASB S2): applies to listed and unlisted entities that must prepare annual financial reports under the Corporations Act and meet a size, emissions or asset test. Group 1 (financial years beginning on or after 1 January 2025) captures entities meeting two of three criteria (consolidated revenue of AUD 500 million or more, gross assets of AUD 1 billion or more, 500 or more employees), plus NGER reporters whose group emits 50,000 tCO2-e or more. Group 2 (from 1 July 2026) and Group 3 (from 1 July 2027) bring in smaller entities, the other NGER reporters and large asset owners.
• United Kingdom (UK SRS): the FCA’s final rules (PS26/19) apply to UK-listed companies on a comply-or-explain basis. Private companies sit outside these rules.
• Singapore (SGX): SGX-listed companies now, with large non-listed companies to follow from FY2030 once legislation is passed.
• Brazil (CBPS 01 and 02): publicly held companies may report, and from 2027 a listed company that does not file must explain why. Financial institutions follow separate central bank rules.
• European Union (CSRD/ESRS): from financial years starting on or after 1 January 2027, the Omnibus amending directive (Directive (EU) 2026/470) applies to EU undertakings, listed or unlisted, with more than 1,000 employees and net turnover above EUR 450 million. Until then, only the first wave of large public-interest entities reports.

Check your local securities regulator or legislative authority for the threshold matrix that applies to you.

What is the difference between IFRS S2 and ESRS E1?

Both standards require climate-related disclosures, including physical risk metrics. They differ on three dimensions that matter for preparers:

• Materiality: IFRS S2 uses financial materiality only (what affects investors). ESRS E1 uses double materiality (financial materiality plus impact materiality, what the company does to the climate as well as what climate does to the company).
• Physical risk metric: IFRS S2 Paragraph 29(c) requires the amount and percentage of assets vulnerable to physical risks. Under the revised ESRS (Delegated Regulation (EU) 2026/1563, applying from financial year 2027), E1-11 paragraph 39 requires the carrying amount of assets at material physical risk before adaptation actions, the percentage of that amount addressed by adaptation actions, and net revenue from activities at material physical risk, each with time horizons. The 2023 text, which applies for financial year 2026 unless a company chooses the revised standards early (E1-9, paragraph 66), also asks for a split by acute and chronic risk and the location of significant assets at risk. The data layer is largely the same, and the disclosure framing is more granular under ESRS.
• Geographic and scoping orientation: IFRS S2 is jurisdiction-agnostic. ESRS E1 is EU-focused (Paris-aligned, with explicit references to EU climate goals). ESRS also requires a non-materiality explanation for climate: a company that concludes climate change is not material, and so omits ESRS E1, must disclose the basis for that conclusion. IFRS S2 has no equivalent requirement.

Companies subject to both frameworks (typically EU-listed multinationals) can use the shared data layer to satisfy both disclosures. The IFRS Foundation and EFRAG published joint interoperability guidance in May 2024 to support this. Its paragraph references follow the 2023 ESRS text.

For more on the EU’s framework, see our CSRD climate risk disclosure guide.

What does the IFRS S2 industry-based guidance require for my sector?

Paragraph 32 of IFRS S2 requires companies to disclose industry-based metrics that are associated with their business model and activities. The Industry-based Guidance on Implementing IFRS S2 covers 68 industries (drawn from the SASB sector taxonomy) with industry-specific disclosure topics, metrics, and activity metrics.

For physical climate risk specifically, eight industries have a physical-risk metric in the Industry-based Guidance, under topic codes ending in -450a: real estate, mortgage finance, insurance, water utilities and services, hotels and lodging, health care delivery, managed care, and forestry management. Entities refer to and consider these metrics, and IFRS S2 does not require the particular metrics (BC137). For these sectors, the metrics can be considered as a way to meet the otherwise open Paragraph 29(c) measure in whole or in part (B65(d)): for example, mortgage loans in 100-year flood zones, or insurance probable maximum loss from weather-related natural catastrophes.

For the eight industries with physical-risk metrics in the Industry-based Guidance, and how to consider whether those metrics meet Paragraph 29(c) in whole or in part, see our walkthrough of the IFRS S2 Industry-based Guidance.

IFRS S1 provides the general disclosure framework for all sustainability risks. IFRS S2 adds the climate-specific layer, including GHG emissions, physical risk metrics, and scenario analysis. With more than 45 jurisdictions now using these standards, IFRS S1 and S2 are becoming the default global baseline for sustainability reporting. Companies preparing for compliance should start by mapping their existing disclosures to the four-pillar structure, then build the data infrastructure needed for the quantitative metrics that S2 demands.