Companies worldwide face a fragmented set of sustainability reporting requirements. The ISSB standards were created to fix that problem. By consolidating four existing frameworks into two global standards, the International Sustainability Standards Board gives companies a single set of disclosure requirements that investors across jurisdictions can rely on.
This guide covers what the ISSB standards require, how they absorb the TCFD recommendations, where they apply globally, and how they compare with the EU’s CSRD. If your organization reports under TCFD today or operates in a jurisdiction adopting ISSB, this is what you need to know.
What Is the ISSB?
The International Sustainability Standards Board (ISSB) is a standard-setting body established by the IFRS Foundation in November 2021. Its mandate: create a comprehensive global baseline for sustainability-related financial disclosures aimed at capital markets.
Before the ISSB, companies navigated overlapping frameworks with different scopes and audiences. TCFD covered climate risk recommendations. SASB published industry-specific metrics. The Climate Disclosure Standards Board (CDSB) focused on environmental reporting. The Integrated Reporting Framework addressed value creation broadly. Each served a purpose, but the overlap created reporting fatigue and inconsistent data for investors.
The ISSB absorbed all four. TCFD formally dissolved into the ISSB in October 2023 (see our TCFD vs ISSB comparison for what changed). SASB standards now sit under the IFRS Foundation. CDSB and the Integrated Reporting Framework were consolidated by mid-2022. The result: two standards that carry forward the best elements of each predecessor.
The International Organization of Securities Commissions (IOSCO) endorsed the ISSB standards in July 2023, calling on its 130+ member jurisdictions to adopt them. That endorsement is what gives the ISSB standards their regulatory momentum. Unlike TCFD, which remained voluntary for most companies, the ISSB standards are being written into law across 30+ countries.
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IFRS S1 and S2: The Two ISSB Standards
The ISSB issued both standards in June 2023. They are designed to work together, with IFRS S1 setting the general framework and IFRS S2 adding climate-specific requirements. Our guide to what IFRS S1 and S2 require covers the full scope of obligations, compliance timelines, and how jurisdictions are adopting each standard.
IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) establishes the architecture. It requires companies to disclose sustainability-related risks and opportunities that could reasonably affect their cash flows, access to finance, or cost of capital. S1 applies across all sustainability topics, not just climate.
IFRS S2 (Climate-related Disclosures) builds on S1 with climate-specific requirements. It inherits the four-pillar structure directly from the TCFD and adds quantitative rigor that the TCFD recommendations lacked.
Both standards organize disclosures around four core content areas:
| Pillar | What Companies Disclose |
|---|---|
| Governance | Board oversight of sustainability risks, management roles, and the processes used to monitor and manage these risks |
| Strategy | Effects on business model, value chain impacts, financial position, climate resilience assessment through scenario analysis |
| Risk Management | How sustainability risks are identified, assessed, prioritized, and integrated into overall risk management |
| Metrics & Targets | Performance measures including GHG emissions, progress toward stated goals, and industry-specific metrics |
The four pillars will look familiar to anyone who has reported under the TCFD framework. That continuity is intentional. The ISSB built on what worked and added specificity where TCFD left room for interpretation.
Key Disclosure Requirements Under IFRS S2
While S1 sets the general framework, S2 is where the disclosure obligations get specific. Three areas represent the biggest step change from previous frameworks.
Physical Risk Identification
IFRS S2 requires companies to classify physical climate risks as acute (event-driven, like floods and wildfires) or chronic (long-term shifts, like rising temperatures and sea level rise). For each risk, companies must specify time horizons, describe geographic concentration of exposed assets, and explain how the risk affects their business model.
Scenario Analysis
Paragraph 22 of IFRS S2 makes scenario analysis mandatory. Companies must assess their climate resilience under a range of climate-related scenarios, including at least one consistent with the Paris Agreement temperature goals. The analysis must cover how strategy would change under different climate outcomes and identify the key assumptions driving results.
Cross-Industry Metrics
Paragraph 29 defines seven categories of metrics every reporting entity must disclose, regardless of industry:
| # | Metric Category | What It Covers |
|---|---|---|
| 1 | GHG emissions | Scope 1, 2, and 3 greenhouse gas emissions |
| 2 | Climate-related physical risks | Amount and percentage of assets vulnerable to physical risks |
| 3 | Climate-related transition risks | Amount and percentage of assets vulnerable to transition risks |
| 4 | Climate-related opportunities | Amount and percentage of assets aligned with climate opportunities |
| 5 | Capital deployment | Amount of capital expenditure deployed toward climate-related risks and opportunities |
| 6 | Internal carbon pricing | Price per metric tonne of GHG emissions used internally |
| 7 | Executive remuneration | Percentage of executive pay linked to climate-related considerations |
Metric #2 is particularly significant. Paragraph 29(c) requires companies to quantify which assets are vulnerable to physical climate risks and express that as both a monetary amount and a percentage of total assets. This goes well beyond the qualitative descriptions that TCFD accepted.
The ISSB standards also incorporate SASB-derived industry-based metrics, meaning companies in high-exposure sectors face additional disclosure requirements tailored to their specific risks.
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Where ISSB Standards Apply: Global Adoption
Over 30 jurisdictions are incorporating the ISSB standards into their regulatory frameworks. Some have made them mandatory; others are in consultation. The pace of adoption accelerated after the IOSCO endorsement.
| Jurisdiction | Status | Effective Date | Notes |
|---|---|---|---|
| United Kingdom | Mandatory (UK SRS) | Jan 2027 | UK-listed companies under UK-endorsed SRS S1/S2. Nine amendments from IFRS S2. |
| Australia | Mandatory (AASB S1/S2) | Jan 2025 | Group 1: large entities (A$500M+ revenue). Group 2 from July 2026. |
| Singapore | Mandatory (SGX) | FY2025 | SGX Main Board listed companies. MAS guidelines cover financial institutions. |
| Brazil | Mandatory (CVM) | Jan 2026 | Listed companies and large investment fund managers |
| Japan | Voluntary (SSBJ) | Apr 2025 | TSE Prime Market companies encouraged; mandatory adoption under review |
| Canada | Proposed (CSA) | TBD | Canadian Securities Administrators consultation ongoing |
| Nigeria | Mandatory (FRC) | Jan 2025 | Public interest entities |
| Hong Kong | Mandatory (HKEX) | Jan 2025 | Main Board listed issuers |
For companies reporting for the first time, the ISSB provides transitional reliefs. During the initial reporting period, entities can limit disclosures to climate-related information only (deferring broader S1 sustainability topics), report with a nine-month delay relative to their financial statements, omit Scope 3 GHG emissions data, and skip comparative information from prior periods.
These reliefs reduce the compliance burden in year one while companies build the data infrastructure and governance processes that full ISSB reporting requires.
ISSB vs TCFD: What Changed
The TCFD was the voluntary recommendation set that paved the way for the ISSB standards. Published in 2017, the TCFD’s four-pillar structure and 11 recommended disclosures became the de facto standard for climate reporting. But the TCFD had limitations: it was voluntary, focused narrowly on climate, and left significant room for interpretation on what “good” disclosure looked like.
The ISSB absorbed everything the TCFD built and added teeth. When the TCFD formally dissolved in October 2023, it transferred its monitoring responsibilities to the ISSB. Companies that had been following the TCFD framework found themselves well-positioned for ISSB adoption because the foundational structure carried over intact.
The key differences are in specificity and enforceability:
| Dimension | TCFD | ISSB (IFRS S2) |
|---|---|---|
| Nature | Voluntary recommendations | Global disclosure standard written into law |
| Status | Dissolved (October 2023) | Active, IOSCO-endorsed, adopted by 30+ jurisdictions |
| Scope | Climate risk only | S1 covers all sustainability; S2 covers climate |
| Physical risk depth | Qualitative description accepted | Quantitative: Para 29(c) requires asset values exposed |
| Scenario analysis | Encouraged | Mandatory (Para 22, with guidance in B1-B18) |
| Industry metrics | None prescribed | SASB-derived, sector-specific disclosure topics |
| Reporting timing | Standalone or annual report | Filed with general-purpose financial statements |
The IFRS Foundation published a detailed comparison confirming that companies applying IFRS S2 will satisfy the TCFD recommendations in full. Separate TCFD reporting is no longer necessary for entities subject to ISSB-aligned regulation.
ISSB vs CSRD: Two Approaches to Climate Disclosure
The ISSB standards and the EU’s CSRD (Corporate Sustainability Reporting Directive) are the two dominant disclosure regimes globally. They share common ground on climate risk but differ in philosophy, scope, and audience.
The ISSB takes an investor-focused, single materiality approach: disclose sustainability matters that affect enterprise value. The CSRD takes a double materiality approach: disclose both how sustainability issues affect the company (financial materiality) and how the company affects people and the environment (impact materiality).
| Dimension | ISSB (IFRS S1/S2) | CSRD (ESRS) |
|---|---|---|
| Geographic scope | Global baseline (jurisdiction-dependent adoption) | EU mandate (with extraterritorial reach for non-EU companies) |
| Materiality lens | Single materiality (investor-focused) | Double materiality (financial + impact) |
| Sustainability scope | Climate (S2) + general sustainability (S1) | Full ESG: Environment (E1-E5), Social (S1-S4), Governance (G1) |
| Physical risk treatment | 12 hazard types, mandatory scenario analysis, asset vulnerability metric | Acute/chronic classification, no prescribed hazard list |
| Primary audience | Investors, lenders, creditors | Investors, regulators, workers, communities, civil society |
| Effective dates | Varies by jurisdiction (2025-2027) | FY2024 for large listed; phased through FY2028 |
Many multinational companies will need to comply with both. The European Financial Reporting Advisory Group (EFRAG) and the ISSB have published interoperability guidance to help companies map disclosures between the two systems, reducing duplicate effort where requirements overlap.
How to Prepare for ISSB Reporting
The IFRS Foundation outlines a four-step approach for companies transitioning to ISSB reporting:
1. Review the standards. Read IFRS S1 and S2 in full. The IFRS Foundation provides a free standards navigator and comparison tables against TCFD, GRI, and other frameworks. Companies already reporting under TCFD will find roughly 80% of their existing processes carry forward.
2. Identify gaps. Compare your current sustainability disclosures against the full ISSB requirements. Common gaps include: quantified asset vulnerability data (Paragraph 29c), formal scenario analysis documentation (Paragraph 22), industry-based metrics from SASB standards, and integration of sustainability disclosures into the financial reporting timeline.
3. Close gaps. Build the governance structures, data pipelines, and internal processes needed to fill identified gaps. Physical risk quantification typically requires climate risk assessment tools that can screen assets across multiple hazards and scenarios. GHG emissions measurement and Scope 3 data collection are separate workstreams that often run in parallel.
4. Plan your timeline. Check your jurisdiction’s effective date and decide whether to use transitional reliefs. First-year reporters can defer Scope 3 emissions, omit comparatives, and report within nine months of the financial year-end rather than simultaneously. Use these reliefs strategically to phase the compliance effort.
Frequently Asked Questions
What are the ISSB standards?
The ISSB standards are two global disclosure frameworks issued by the International Sustainability Standards Board: IFRS S1 (general sustainability disclosures) and IFRS S2 (climate-related disclosures). They consolidate the TCFD, SASB, CDSB, and Integrated Reporting frameworks into a single baseline for investor-focused sustainability reporting.
Are ISSB standards mandatory?
It depends on your jurisdiction. Over 30 countries are adopting the ISSB standards into local regulation. The UK, Australia, Singapore, Brazil, Nigeria, and Hong Kong have made them mandatory for certain entities. Canada and Japan are in consultation or voluntary adoption phases. Check your local securities regulator for specific requirements.
What are the four pillars of ISSB?
The four pillars are Governance (board oversight and management roles), Strategy (business model effects and resilience assessment), Risk Management (how risks are identified and prioritized), and Metrics and Targets (performance measures including GHG emissions and asset vulnerability). This structure comes directly from the TCFD framework that the ISSB absorbed.
Is ISSB replacing TCFD?
Yes. The TCFD formally dissolved in October 2023 and transferred its monitoring responsibilities to the ISSB. Companies applying IFRS S2 satisfy all TCFD recommendations. Separate TCFD reporting is no longer necessary for entities subject to ISSB-aligned regulation.
What is the difference between ISSB and CSRD?
The ISSB takes an investor-focused, single materiality approach covering climate and general sustainability. The CSRD uses double materiality (financial plus impact) and covers the full range of ESG topics across environmental, social, and governance dimensions. Many multinational companies will need to comply with both frameworks.
When do ISSB standards take effect?
IFRS S1 and S2 were issued in June 2023. Effective dates vary by jurisdiction: Australia and Hong Kong from January 2025, Singapore from FY2025, the UK and Brazil from January 2026. Transitional reliefs allow first-year reporters to focus on climate only, defer Scope 3, and report with a nine-month delay.
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Conclusion
The ISSB standards mark a turning point for climate disclosure. By absorbing the TCFD, SASB, CDSB, and Integrated Reporting Framework into IFRS S1 and S2, the ISSB reduced the fragmentation that made sustainability reporting inconsistent and expensive. For companies, the key shift is from voluntary, qualitative climate narratives to mandatory, quantified disclosures filed alongside financial statements. The physical risk requirements under Paragraph 29(c) demand that organizations know which assets are exposed and by how much. With 30+ jurisdictions writing these ISSB standards into law, the question is no longer whether to report, but how quickly your organization can close the gap between current practice and what the standards require.
