IFRS S2 Paragraph 22: Scenario Analysis Disclosure

IFRS S2 Paragraph 22 asks companies to show how resilient their strategy and business model are to climate change, and to use scenario analysis to assess that resilience. It opens with three sentences, then lists the required items. Paragraph 22(a) asks for the resilience assessment. Paragraph 22(b) asks how the scenario analysis was carried out. The Basis for Conclusions explains that the entity discloses its interpretation of the scenario results, and the results themselves do not have to be published (BC59). A review of Australia’s second reporting cohort recommends clearer links between scenario analysis and strategic resilience.

The Four Questions at a Glance

#	Question	What it asks	What a clear answer shows	Standard cite
1	What inputs did you use	7 sub-elements (sources, diverse range, transition vs physical, alignment, relevance, time horizons, scope) + 5 assumptions + period	Each sub-element addressed, including (4) alignment and (5) relevance	Para 22(b)(i)(1) to (7); 22(b)(ii); 22(b)(iii); BC66
2	What did the analysis tell you	5 output sub-elements (strategy implications, uncertainty, financial flexibility, asset redeployment, climate-resilience capex effect)	Management’s interpretation of the scenario results	Para 22(a)(i) to (iii); BC59; BC60
3	How sophisticated the analysis must be	Where the entity sits on exposure and on skills, capabilities or resources (B2-B7)	Quantitative approach required at high exposure with access to skills, capabilities or resources; simpler approaches allowed otherwise	B17; B6; BC65; factsheet (educational)
4	How often to update	22(a) every reporting period; 22(b) on the strategic planning cycle (for example every 3 to 5 years)	Cycle period disclosed	B18; BC68

Citation key: “Para” = paragraphs of IFRS S2 (e.g., Para 22, Para 22(a)(i), Para 30); “B” = paragraphs of Appendix B application guidance (e.g., B17, B18); “BC” = paragraphs of the Basis for Conclusions on IFRS S2 (e.g., BC59, BC65, BC66, BC68); “IBG” = Industry-based Guidance on Implementing IFRS S2, which the standard does not require entities to apply.

Paragraph 22 has two parts: the resilience assessment and the scenario analysis

Para 22 of IFRS S2 opens:

“An entity shall disclose information that enables users of general purpose financial reports to understand the resilience of the entity’s strategy and business model to climate-related changes, developments and uncertainties, taking into consideration the entity’s identified climate-related risks and opportunities. The entity shall use climate-related scenario analysis to assess its climate resilience using an approach that is commensurate with the entity’s circumstances…”
(IFRS S2, paragraph 22)

The Basis for Conclusions describes the two parts:

“information about the entity’s climate resilience to enable users to understand key areas of uncertainty, the implications for the entity’s strategy and business model, and its adaptive capacity; and… information about how the entity has carried out climate-related scenario analysis to inform its assessment of its climate resilience.”
(BC57)

BC59 explains how the two relate:

“the ISSB emphasised that an entity is not required to disclose the results of its scenario analysis, but is instead required to disclose its interpretation of those results.”
(BC59)

The resilience assessment is management’s interpretation. Scenario analysis is the input that informs it. Para 22(a) asks for the assessment. Para 22(b) asks how the analysis was carried out. The two are separate disclosures.

Our guide to Paragraph 29(c) reads that paragraph as four questions. Para 22 works the same way, with 18 items in total: five in 22(a), seven in 22(b)(i), five in 22(b)(ii) and one in 22(b)(iii).

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Where Para 22 sits in the standard

Para 22 sits in the Strategy section of IFRS S2, after the financial-effects paragraphs (Paras 15 to 21). Para 23 follows it, and risk management follows at Paras 24 to 26. Three sets of text shape how it is read.

The standard. Para 22 itself, plus the phrase “see paragraphs B1-B18”, which sends the preparer to Appendix B. The Appendix B heading confirms it has the same authority as the rest of the standard.

Appendix B B1-B18. Eighteen paragraphs of application guidance in three sub-sections. B2-B7 set out the factors an entity considers when assessing its circumstances (exposure, and skills, capabilities and resources). B8-B15 set out the factors it considers when choosing an approach (inputs and analytical choices). B16-B18 cover change over time, including the B17 requirement for a quantitative approach in some cases and the B18 update rule.

BC57-BC69. Thirteen paragraphs of the Basis for Conclusions, which accompanies the standard but is not part of it. BC57 describes the two parts of Para 22. BC59 explains that the entity discloses its interpretation of the results. BC62 and BC63 record why the “unable to do so” opt-out was dropped. BC64 notes the TCFD sources of the application guidance. BC65 explains that a lack of skills is no defence when resources are available. BC66 explains what the diverse-range disclosure covers. BC67 records that the ISSB chose not to require an aligned scenario. BC68 confirms the update rule.

Two documents explain Para 22 without changing it. The ISSB staff paper of January 2023 (Agenda Reference 4A) fed the B1-B18 guidance; it states that it does not represent the views of the ISSB. The IFRS Foundation factsheet (March 2026) illustrates the process and the circumstance assessment; it is educational and does not change the requirements.

Cross-framework note. ESRS E1 treats scenario analysis differently. Our ESRS E1-2 physical risk methodology guide covers the European approach.

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Question 1: the scenario analysis inputs you disclose under Para 22(b)

Para 22(b)(i) requires disclosure of seven input items:

1. “which climate-related scenarios the entity used for the analysis and the sources of those scenarios” (Para 22(b)(i)(1));
2. “whether the analysis included a diverse range of climate-related scenarios” (Para 22(b)(i)(2));
3. “whether the climate-related scenarios used for the analysis are associated with climate-related transition risks or climate-related physical risks” (Para 22(b)(i)(3));
4. “whether the entity used, among its scenarios, a climate-related scenario aligned with the latest international agreement on climate change” (Para 22(b)(i)(4));
5. “why the entity decided that its chosen climate-related scenarios are relevant to assessing its resilience…” (Para 22(b)(i)(5));
6. “the time horizons the entity used in the analysis” (Para 22(b)(i)(6)); and
7. “what scope of operations the entity used in the analysis (for example, the operating locations and business units used in the analysis)” (Para 22(b)(i)(7)).

A clear Para 22(b)(i) disclosure addresses each of the seven. Australia’s regulator, ASIC, reviewed 40 first-year reports. Most entities in its sample used publicly available scenarios. These typically drew on the SSP-RCP scenarios of the World Climate Research Programme, the NGFS, the IEA and the Australian Energy Market Operator. ASIC said entities must explain which scenarios they used and why those scenarios are relevant.

Para 22(b)(ii) then lists five assumption sub-elements (climate policies in operating jurisdictions, macroeconomic trends, national- or regional-level variables, energy usage and mix, technology developments). BC61 confirms the list is non-exhaustive: an entity might make additional material assumptions that should be disclosed. Para 22(b)(iii) closes the methodology disclosure with the reporting period in which the scenario analysis was carried out.

What “diverse range” means. BC66 explains what the diverse-range disclosure covers:

“IFRS S2 also requires disclosure of whether a diverse range of climate-related scenarios was used in the analysis, meaning entities are required to disclose information such as the number of scenarios used and whether the scenarios cover different outcomes or pathways. For example, if an entity considered both orderly and disorderly transition scenarios, the entity could disclose that fact.”
(BC66)

IFRS S2 does not require a diverse range. It requires the entity to disclose whether it used one, and it sets no minimum count. Two scenarios from one release can still be disclosed accurately: say so, and say why they are relevant (Para 22(b)(i)(5)). Three scenarios that span different warming outcomes is Continuuiti’s recommendation.

Some jurisdictions set a floor. New Zealand’s NZ CS 1 requires, at a minimum, a 1.5°C scenario, a 3°C or greater scenario and a third scenario. In Australia, the Corporations Act requires at least two scenarios, one limited to 1.5°C and one well above 2°C. A review of 25 Australian reports found most relied on IPCC, NGFS or IEA reference pathways, and 52% disclosed more than the minimum two. IFRS S2 itself has no minimum.

One scenario can be enough. B12 permits “one or more” scenarios. B12 requires a reasonable and supportable basis for the choice, and Para 22(b)(i)(5) requires disclosure of why the chosen scenarios are relevant. A single scenario needs that explanation, tied to the entity’s risk geography and exposure.

Common scenario sources. The ISSB staff paper of January 2023 (Para 19) gives scenarios from the International Energy Agency (IEA), the Intergovernmental Panel on Climate Change (IPCC) and the Network for Greening the Financial System (NGFS) as examples of publicly available, off-the-shelf scenarios. For physical risk, common choices are the IPCC SSP-RCP combinations from CMIP6, the older RCP combinations from CMIP5, and the NGFS long-term scenarios (Phase V, November 2024). Phase V has seven scenarios, all built on the same SSP2 socioeconomic assumptions. Some of its physical-loss estimates rely on a paper that has since been retracted, and the NGFS asks users to keep that in mind; other variables are unaffected. The next release of the NGFS long-term scenarios is planned for the end of 2026. Internally developed scenarios are allowed (B11) and need the same relevance explanation.

Alignment with the Paris Agreement. Para 22(b)(i)(4) requires disclosure of whether the entity used a scenario aligned with the latest international agreement on climate change, currently the Paris Agreement. BC67 records that the ISSB chose not to require an aligned scenario. The disclosure can be one sentence: yes, and which scenario; or no, and why the chosen set still covers the resilience question.

TCFD legacy. B1 carries a footnote acknowledging that the application guidance B1-B18 “draws on the range of practice outlined in documents published by the Task Force on Climate-related Financial Disclosures (TCFD), including Technical Supplement: The Use of Scenario Analysis in Disclosure of Climate-related Risks and Opportunities (2017) and Guidance on Scenario Analysis for Non-Financial Companies (2020)”. BC64 confirms the same. TCFD already recommended describing the resilience of strategy under different scenarios. IFRS S2 makes the resilience assessment a requirement, lists its five 22(a) elements, and requires an update every reporting period. A reporter moving from a TCFD-aligned report keeps most of its 22(b) method. It extends its resilience description to cover the five 22(a) items and updates it every reporting period.

Industry-based metrics. For eight industries, the Industry-based Guidance has a climate topic coded 450a. Three of these protocols name scenario sources. IF-RE-450a.2 refers to scenarios “as defined by the International Energy Agency in its annual World Energy Outlook”. The FN-IN-450a.1 protocol refers to the TCFD Supplemental Guidance for Insurance Companies. RR-FM-450a.1 gives the IPCC Climate Scenario Process as an example. Our guide to the IFRS S2 industry metrics covers each one.

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Question 2: the resilience assessment you disclose under Para 22(a)

Para 22(a) requires disclosure of the entity’s assessment of its climate resilience as at the reporting date. The standard structures this around three sub-elements (i, ii, iii), with sub-element (iii) decomposed into three further components (1, 2, 3). Five disclosure obligations result:

1. “the implications, if any, of the entity’s assessment for its strategy and business model, including how the entity would need to respond to the effects identified in the climate-related scenario analysis” (Para 22(a)(i));
2. “the significant areas of uncertainty considered in the entity’s assessment of its climate resilience” (Para 22(a)(ii));
3. “the availability of, and flexibility in, the entity’s existing financial resources to respond to the effects identified in the climate-related scenario analysis…” (Para 22(a)(iii)(1));
4. “the entity’s ability to redeploy, repurpose, upgrade or decommission existing assets” (Para 22(a)(iii)(2)); and
5. “the effect of the entity’s current and planned investments in climate-related mitigation, adaptation and opportunities for climate resilience” (Para 22(a)(iii)(3)).

BC59 explains what this part asks for:

“the ISSB emphasised that an entity is not required to disclose the results of its scenario analysis, but is instead required to disclose its interpretation of those results.”
(BC59)

The standard does not ask the entity to publish its scenario tables, temperature pathways or hazard matrices. It asks what management concluded those results mean for the strategy and business model. The tables support that conclusion.

A report that shows three NGFS scenario tables and stops there has described its method and left out the assessment Para 22(a) asks for.

Significant areas of uncertainty (Para 22(a)(ii)). BC60 gives the ISSB’s own example:

“the entity might disclose that its resilience assessment is subject to significant uncertainty arising from the effects of future climate-driven migration, which might affect the stability of its supply chain or the resilience of its assets and operations in particular geographies.”
(BC60)

This sentence names what the entity does not know. A clear 22(a)(ii) disclosure is specific to the entity’s risk geography and business model, names two or three sources of uncertainty, and says how much they affect the resilience assessment. Examples include:

• regional precipitation pattern shifts beyond CMIP6 ensemble agreement;
• sea-level-rise high-end tail under SSP5-8.5;
• supply-chain second-order effects from heat stress in upstream regions.

Capacity to adjust or adapt (Para 22(a)(iii)). Para 23 asks the entity to consider the Para 29 metric categories when preparing its Para 22 disclosures. Para 22(a)(iii)(3) covers the effect of current and planned investments in adaptation. Para 29(e) reports the amount of capital deployed. The two disclosures should cross-refer and agree on the scale of climate-related capital spending.

The assessment is the disclosure. Scenario tables alone do not make a resilience claim. Para 22(a) requires the assessment, and BC59 explains that it is management’s interpretation of the results. ASIC’s review checked the scenarios used, whether the analysis was qualitative or quantitative, and the time frames applied.

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Question 3: how sophisticated the scenario analysis must be

IFRS S2 scales the scenario analysis to the entity’s circumstances, and B17 sets one requirement at the top of that scale.

The circumstance assessment. B2 establishes that an entity uses an approach to scenario analysis that is “commensurate with its circumstances” and that those circumstances are assessed by reference to two factors: the entity’s exposure to climate-related risks and opportunities (B4-B5), and the skills, capabilities and resources available to the entity (B6-B7). B4 sets a direction, and B17 sets the requirement:

“…with all else being equal—the greater the entity’s exposure to climate-related risks or opportunities, the more likely it is the entity would determine that a more technically sophisticated form of climate-related scenario analysis is required.”
(B4)

B17. B17 opens by allowing a simpler approach where it suits the entity’s circumstances. An entity with high exposure that lacks the skills, capabilities or resources may start simple and build toward a quantitative approach. B17 then closes with the requirement:

“An entity with a high degree of exposure to climate-related risks and opportunities, and with access to the necessary skills, capabilities or resources, is required to apply a more advanced quantitative approach to climate-related scenario analysis.”
(B17)

The test is “or resources”: the entity does not need to be strong on all three.

BC65 on skills. BC65 explains that a lack of in-house skills is no defence when resources are available:

“if an entity’s climate-related risk exposure warrants a more sophisticated approach to scenario analysis, the entity cannot use a lack of skills or capabilities to justify using a less sophisticated approach if it has the resources available to obtain or develop those skills or capabilities.”
(BC65)

B6 explains why: if resources are available, the entity can invest in obtaining or developing the skills. An entity with material climate exposure and the resources to invest cannot rest a qualitative-only disclosure on a skills gap.

The factsheet chart. Figure 2 of the IFRS Foundation factsheet (March 2026) charts the B2 circumstance assessment:

• Vertical axis: exposure to climate-related risks and opportunities (low to high).
• Horizontal axis: skills, capabilities, and resources available (low to high).
• One arrow runs from “Simpler approach (such as qualitative analysis)” to “More advanced approach (such as quantitative modelling)”. The chart does not mention B17 and has no quadrants.
• Our reading of how the assessment plays out is in the table below.

Exposure	Skills/capabilities/resources	What the standard allows or requires	Standard cite
Low	Low	Simpler approach allowed, including qualitative narratives	B15; B17
Low	High	Simpler approach allowed where it suits the circumstances	B2; B4
High	Low, but resources available	More advanced quantitative approach required	B17; B6; BC65
High	Low, no resources	Simpler approach allowed at first; build toward quantitative over time	B17; BC65
High	High	More advanced quantitative approach required	B17

The factsheet is educational and does not change the requirements. Its chart is a reading aid for B2 to B7. Continuuiti recommends that every reporter states where it sits on exposure and on skills, capabilities or resources, and why. B17 is the requirement; stating the position makes it checkable.

The staff paper three-stage progression. The January 2023 staff paper describes three stages: just beginning (qualitative scenario narratives, focused boundary), gaining experience (quantitative information illustrating pathways and outcomes, ideally for the entity as a whole), and advanced experience (greater rigour and entity-specific quantitative outputs). The model comes from TCFD guidance, and the ISSB asked for application guidance reflecting it. The final B1 to B18 text does not use the stages. Continuuiti recommends that reporters with an early-stage capability say where they sit on this continuum and why.

Quantification without narrative. The staff paper (Para 22) warns:

“an excessive focus on quantification can impair strategic thinking. If an entity has not established a clear and logical scenario ‘narrative’ reflecting the conceptual relationships between the key drivers, constraints, pathways and potential outcomes, then a rush to quantification may serve only to put an ever-finer point on an ineffective tool.”
(ISSB scenario analysis staff paper, January 2023, Para 22)

Quantification rests on narrative. Dense tables without a clear scenario narrative miss the purpose of Para 22, however sophisticated the numbers look. The B17 requirement applies at high exposure with access to skills, capabilities or resources. Any entity may use qualitative narratives where that suits its circumstances (B15, B17).

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Question 4: how often to update the Para 22 disclosure

B18 sets the update rule:

“the entity might carry out its climate-related scenario analysis in line with its strategic planning cycle, including a multi-year strategic planning cycle (for example, every three to five years). Therefore, in some reporting periods the entity’s disclosures in accordance with paragraph 22(b) could remain unchanged from the previous reporting period if the entity does not conduct a scenario analysis annually. The entity shall—at a minimum—update its climate-related scenario analysis in line with its strategic planning cycle. However, an assessment of the entity’s resilience is required to be carried out annually…”
(B18)

BC68 explains it: the information required by 22(a) is updated each reporting period; the information required by 22(b) may remain unchanged across periods if scenario analysis was not carried out in the period.

Name the cycle. A reporter running a multi-year scenario analysis cycle should disclose the cycle period: that 22(b) carries forward for the next reporting periods, that 22(a) updates each year, and when the next scenario analysis is due. Naming the cycle period is Continuuiti’s recommendation.

The circular-logic resolution. The staff paper Para 27 acknowledges what looks like circular logic in the B2-B7 framework:

“the staff acknowledges that considering the degree of the entity’s exposure to climate-related risks in order to determine the approach to climate-related scenario analysis may be perceived as implying a ‘circular logic’. In its October 2022 meeting, the ISSB decided to require entities to disclose whether and how they use climate-related scenario analysis to inform the identification of climate-related risks and opportunities. Although those two considerations may seem directionally opposed, the staff emphasises that risk management and strategic planning are not linear, sequential exercises but rather involve an ongoing, iterative process.”
(ISSB scenario analysis staff paper, January 2023, Para 27)

Scenarios both inform risk identification and are calibrated to identified risks, so the process is iterative. For Para 22(b), the method section can say how prior-period risk registers informed the scenario picks, and how the current outputs feed the next register. The October 2022 decision became Para 25(a)(ii), which requires disclosure of whether and how the entity uses scenario analysis to identify climate-related risks.

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Proportionality in Para 22 and the removed opt-out

Para 22’s own operative paragraph sets the proportionality test for scenario analysis. The entity must use “an approach that is commensurate with the entity’s circumstances” (Para 22). B1 elaborates:

“The entity is required to use an approach to climate-related scenario analysis that enables it to consider all reasonable and supportable information that is available to the entity at the reporting date without undue cost or effort.”
(B1)

B2-B7 set out how to assess what is commensurate: exposure, and the skills, capabilities and resources available. B17 sets the requirement at the top: high exposure with access to skills, capabilities or resources means a more advanced quantitative approach. A reporter relying on proportionality should say where it sits on that assessment. The commensurate-with-circumstances language scales the effort and leaves the B17 requirement in place.

Para 30 is the wrong anchor for Para 22. Para 30 of IFRS S2 reads:

“In preparing disclosures to meet the requirements in paragraph 29(b)–(d), an entity shall use all reasonable and supportable information that is available to the entity at the reporting date without undue cost or effort.”
(Para 30)

The reasonable-and-supportable language matches B1, and Para 30 covers only the cross-industry metrics in Para 29(b) to (d). It does not govern Para 22. The same principle reaches Para 22 through B1, B8 and the commensurate-with-circumstances wording, which route proportionality through the B2 to B7 assessment and the “without undue cost or effort” limit. The principle also appears at Para 11 (risk identification) and Para 18 (anticipated financial effects).

The opt-out that was explicitly removed. The Exposure Draft of IFRS S2 proposed an “unable to do so” opt-out clause for scenario analysis. The ISSB explicitly considered and rejected it. BC62 records the discussion:

“The Exposure Draft proposed that an entity would be required to use climate-related scenario analysis to assess its climate resilience unless it is ‘unable to do so’. This proposed requirement would have allowed an entity to use an alternative method to assess its climate resilience if it is unable to use climate-related scenario analysis… Some respondents were concerned that the wording would allow entities to opt out of using climate-related scenario analysis. Others were unclear about what criteria to consider in determining whether an entity is ‘able’ or ‘unable’ to carry out climate-related scenario analysis.”
(BC62)

BC63 records the ISSB’s decision:

“The ISSB decided to remove the wording ‘unable to do so’ from the requirements on climate resilience in IFRS S2 and to confirm that an entity is required to use climate-related scenario analysis to assess its climate resilience. The ISSB also decided to clarify that climate-related scenario analysis encompasses a range of practices, from qualitative scenario narratives to sophisticated quantitative modelling…”
(BC63)

Two implications. First, a reporter cannot anchor a Para 22 omission on capacity grounds. Scenario analysis is mandatory. Second, the standard explicitly recognises that scenario analysis includes qualitative narratives at the lower end of the maturity spectrum. A small or low-exposure entity is not exempt; it is permitted to use a qualitative scenario narrative and it must disclose what that narrative says, what scenarios it considered, and what it interpreted from the analysis under Para 22(a).

In Australia, about one in five entities in ASIC’s sample limited the analysis to qualitative narrative scenarios. ASIC said AASB S2 allows this where the approach is commensurate with the entity’s circumstances.

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Seven positions to state in a Para 22 disclosure

#	Position	Standard or recommendation	Standard cite
1	Run at least three scenarios spanning materially different warming outcomes	Disclose whether the range is diverse, with the number of scenarios and whether they cover different outcomes or pathways: standard. Three scenarios: Continuuiti recommendation.	Para 22(b)(i)(2); BC66
2	Name scenario sources (IPCC SSP-RCP, NGFS Phase V, IEA, internally developed)	Naming the scenarios and sources: standard. Why they are relevant: standard. Why these sources over others: Continuuiti recommendation.	Para 22(b)(i)(1), (5); staff paper Para 19
3	Define time horizons explicitly + at least one 2050+ horizon	Horizon disclosure: standard. 2050+ coverage: Continuuiti recommendation.	Para 22(b)(i)(6); Para 10(d)
4	Disclose the resilience assessment as well as the method	Standard	Para 22(a); BC59 explains
5	Say whether a Paris-aligned scenario was used	Standard: disclose whether one was used. Using one is optional.	Para 22(b)(i)(4); BC67
6	State where the entity sits on exposure and on skills, capabilities or resources	B17 requirement: standard. Stating the position: Continuuiti recommendation.	B17; B6; factsheet Figure 2 (educational only)
7	Disclose the update pattern (cycle period explicit)	Update rule: standard. Naming the cycle period: Continuuiti recommendation.	B18; BC68

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Where the Para 22 framework stops

Three points fall outside what Para 22 settles, and each belongs in the disclosure.

IFRS S2 sets no scenario count. Local rules can. New Zealand requires at least three scenarios (NZ CS 1). UK SRS S2 carries the same Para 22 and B1 to B18 text. Australian reporters face a statutory floor: at least two scenarios, one limited to 1.5°C and one well above 2°C. Reporters under such a floor should disclose it alongside their IFRS S2 position.

Using a Paris-aligned scenario is optional under IFRS S2. BC67 records that the ISSB chose not to require one, and reporters must disclose whether they used one. In Australia the Corporations Act requires a 1.5°C scenario. Under IFRS S2, a non-aligned scenario set with a stated rationale is acceptable.

Climate model constraints. The NEX-GDDP-CMIP6 archive covers SSP1-2.6, SSP2-4.5 and SSP5-8.5. Check which of them your data provider ran. A dataset built on a single climate model shows a narrower range than a multi-model set. Name the model, flag the single-model limitation, and present results as a single amount or a range (Para 22 allows either). This belongs with the key assumptions in Para 22(b)(ii), a list that is not exhaustive (BC61).

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Sources cited

Standard text and Basis for Conclusions

• IFRS Foundation, IFRS S2 Climate-related Disclosures (June 2023, as amended December 2025). Para 22 (operative paragraph), Para 22(a)(i)-(iii), Para 22(b)(i)(1)-(7), Para 22(b)(ii)(1)-(5), Para 22(b)(iii), Para 30 (reasonable and supportable information for Para 29(b) to (d)).
• IFRS S2 Appendix B, paragraphs B1-B18 (application guidance for Para 22). B1 (TCFD legacy footnote), B2-B7 (assess circumstances: exposure plus skills/capabilities/resources), B8-B15 (determine appropriate approach), B16-B18 (additional considerations). B17 and B18 quoted.
• Basis for Conclusions on IFRS S2, paragraphs BC57-BC69: BC57 (two parts), BC59 (interpretation of results), BC60 (uncertainty example), BC61 (assumption list non-exhaustive), BC62-BC63 (removed opt-out), BC64 (TCFD sources), BC65 (skills and resources), BC66 (diverse-range disclosure), BC67 (aligned scenario not required), BC68 (update rule). The Basis for Conclusions accompanies, but is not part of, IFRS S2.

IFRS Foundation and ISSB supporting documents

• IFRS Foundation, Factsheet Series: Climate resilience and climate-related scenario analysis requirements in IFRS S2 (March 2026). Figure 1, three-step process. Figure 2, exposure against skills, capabilities and resources. Educational material; it does not change the requirements.
• ISSB staff paper, Using scenario analysis to assess climate resilience (ISSB meeting, January 2023, Agenda Reference 4A). Three-stage progression model (just beginning, gaining experience, advanced experience); Para 19 example sources (IEA, IPCC, NGFS); Para 22 warning on quantification without narrative; Para 27 on circular logic. The paper does not represent the views of the ISSB.

TCFD legacy (referenced by B1 footnote and BC64)

• TCFD, Technical Supplement: The Use of Scenario Analysis in Disclosure of Climate-related Risks and Opportunities (2017).
• TCFD, Guidance on Scenario Analysis for Non-Financial Companies (2020).

Reviews of first-wave reports and other sources

• Deloitte Australia, Early insights into Wave 1 of Australian climate reporting (23 March 2026; 25 entities). deloitte.com
• KPMG Australia, AASB S2 First Impressions: Early findings from the first wave of AASB S2 sustainability reporters in Australia (FAST30), March 2026; and AASB S2 First Impressions 30 June 2026 (September 2026). kpmg.com
• SLR Consulting, What companies can learn from the first statements under New Zealand’s mandatory Climate-Related Disclosures framework (31 July 2024). slrconsulting.com
• ASIC, REP 839: ASIC’s review of sustainability reports lodged for 31 December 2025 (21 September 2026).
• External Reporting Board, NZ CS 1 Climate-related Disclosures (December 2022), para 13.
• NGFS, NGFS Climate Scenarios for central banks and supervisors, Phase V (November 2024).

Companion pieces and methodology references

• Our guide to Paragraph 29(c).
• Our guide to the IFRS S2 industry metrics.
• Continuuiti Climate Risk methodology and Flood Depth methodology.

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Frequently asked questions

What does IFRS S2 paragraph 22 require?

Paragraph 22 requires the entity to disclose information that enables users to understand the resilience of its strategy and business model to climate-related changes, and to use climate-related scenario analysis to assess that resilience. BC57 describes two parts. Paragraph 22(a) requires the entity to disclose its assessment of climate resilience as at the reporting date (five items). Paragraph 22(b) requires the entity to disclose how it carried out scenario analysis to inform that assessment (seven input items, five assumption items and the reporting period). They are separate disclosures.

What is the difference between paragraph 22(a) and 22(b)?

Paragraph 22(a) is the output disclosure: the entity’s interpretation of its resilience as at the reporting date, including implications for strategy, significant areas of uncertainty, financial flexibility, the ability to redeploy assets, and the effect of climate-related investments. Paragraph 22(b) is the method disclosure: which scenarios the entity used, what assumptions, what time horizons and what scope of operations. BC59 explains that an entity is not required to disclose the results of its scenario analysis and is required to disclose its interpretation of those results. The method supports the interpretation, which is what Para 22(a) asks for.

Does IFRS S2 require a quantitative scenario analysis?

Not for every entity. Paragraph B17 sets the requirement: an entity with a high degree of exposure to climate-related risks and opportunities, and with access to the necessary skills, capabilities or resources, is required to apply a more advanced quantitative approach. If resources are available, the entity can obtain or develop the skills, so a lack of skills is no defence (B6, BC65). Any entity may use qualitative scenario narratives where that suits its circumstances (B15, B17), and an entity with high exposure that lacks the skills, capabilities or resources may start that way and build up (B17, BC65).

How often must IFRS S2 scenario analysis be updated?

Asymmetrically. Paragraph B18 establishes that the entity shall, at a minimum, update its scenario analysis in line with its strategic planning cycle, including a multi-year cycle (for example, every three to five years). In non-cycle reporting periods, the methodology disclosure under paragraph 22(b) may remain unchanged from the previous period. The resilience assessment under paragraph 22(a), however, is required to be carried out annually. BC68 explains the same rule. A reporter running a multi-year cycle should disclose the cycle period explicitly so a reader does not have to guess whether the methodology is intentionally carried forward or simply not refreshed.

Is alignment with the Paris Agreement mandatory under IFRS S2?

No. Using an aligned scenario is optional. Paragraph 22(b)(i)(4) requires disclosure of whether the entity used a scenario aligned with the latest international agreement on climate change, currently the Paris Agreement. BC67 records that the ISSB chose not to require one. The disclosure is required either way: yes, the entity used an aligned scenario (and which), or no, it did not (and why the chosen set still covers the resilience question). Leaving the disclosure out misses a required item. Australian reporters face a separate legal requirement for a 1.5°C scenario.