Quick Comparison
| IFRS S1 | IFRS S2 | |
|---|---|---|
| Scope | All sustainability-related risks and opportunities | Climate-related risks and opportunities specifically |
| Applicability | Entities preparing general purpose financial reports | Same entities, applied alongside S1 |
| Required/Voluntary | Voluntary (being adopted into national law) | Voluntary (being adopted into national law) |
| Geography | Global | Global |
| Key Focus | General framework for sustainability disclosure | Climate-specific disclosure requirements with industry metrics |
| Assurance | Designed for assurance readiness | Designed for assurance readiness |
What is IFRS S1?
IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) is the foundational standard in the ISSB framework. Issued in June 2023, it establishes the overall architecture for sustainability disclosure: what an entity must report, how it should be structured, and the principles governing the preparation of sustainability-related financial disclosures.
S1 requires entities to disclose information about all sustainability-related risks and opportunities that could reasonably be expected to affect the entity's cash flows, access to finance, or cost of capital over the short, medium, or long term. The standard organizes disclosures around four core content areas — Governance, Strategy, Risk Management, and Metrics & Targets — directly adopted from the TCFD framework.
Critically, S1 is not limited to any single sustainability topic. It covers everything from water scarcity and biodiversity to human capital and supply chain risks — any sustainability matter that is financially material. When identifying specific topics and metrics, S1 directs entities to consider SASB Standards and other relevant materials, including the CDSB Framework and GRI Standards.
What is IFRS S2?
IFRS S2 (Climate-related Disclosures) is the first topical standard issued by the ISSB, addressing climate-related risks and opportunities specifically. Also issued in June 2023, S2 provides detailed requirements for climate disclosure organized under the same four pillars as S1.
S2 requires entities to disclose their climate-related governance, strategy (including transition plans and scenario analysis), risk management processes, and metrics including Scope 1, 2, and 3 greenhouse gas emissions, climate-related targets, and industry-specific climate metrics drawn from SASB Standards. The standard covers both physical risks (acute and chronic) and transition risks (policy, technology, market, reputational).
S2 includes cross-industry metrics that all entities must disclose (like GHG emissions and climate-related capital expenditure) and industry-based metrics derived from SASB's 68 industry classifications that have climate-relevant topics. This dual layer — universal metrics plus industry-specific metrics — is a defining feature of S2.
Key Differences
1. General vs Topical
S1 is the general framework; S2 is a topical application of that framework to climate. Think of S1 as the operating system and S2 as the first application running on it. S1 establishes the rules, principles, and structure that all sustainability disclosures follow. S2 applies those rules specifically to climate, adding climate-specific requirements, metrics, and guidance.
2. Subject Matter Breadth
S1 covers all sustainability-related risks and opportunities — climate, biodiversity, water, human capital, supply chain, cybersecurity, or anything else that could affect enterprise value. S2 covers only climate. An entity applying the ISSB framework must apply S1 to all financially material sustainability topics and S2 for the climate-specific requirements within that broader set.
3. Metric Prescriptiveness
S1 is less prescriptive about specific metrics. It directs entities to consider SASB Standards and other sources when identifying metrics but does not mandate specific data points beyond general requirements for quantitative and qualitative information. S2 mandates specific metrics: Scope 1, 2, and 3 GHG emissions (using the GHG Protocol), climate-related capital deployment, internal carbon prices (if used), climate-related remuneration, and industry-specific climate metrics.
4. Scenario Analysis
S1 requires entities to describe how they assess sustainability-related risks and opportunities but does not specifically mandate scenario analysis for non-climate topics. S2 explicitly requires climate-related scenario analysis, including consideration of how different climate pathways (aligned and misaligned with the Paris Agreement) would affect the entity's strategy and business model.
5. Industry-Specific Guidance
S1 references SASB Standards as a source for identifying industry-specific sustainability topics and metrics across all sustainability dimensions. S2 goes further by incorporating 68 industry-based disclosure topics with specific climate metrics drawn from SASB, making them an integral part of the standard rather than a reference source. The industry metrics in S2 are more formally embedded than the industry guidance referenced by S1.
6. Transition Provisions
Both standards include transition provisions for first-time application, but they differ slightly. S1 allows entities to focus solely on climate-related disclosures (i.e., apply only S2) in the first year of reporting, deferring broader sustainability topics. S2 provides a one-year grace period for Scope 3 emissions disclosure. These provisions acknowledge different implementation challenges — S1's breadth versus S2's data demands.
Which One Do You Need?
Both. S1 and S2 are designed to be applied together and are inseparable in practice. An entity cannot apply S2 without S1 because S1 provides the foundational requirements (reporting principles, materiality guidance, general disclosure requirements) that S2 builds upon.
In the first year, entities can use S1's transition relief to report only on climate (effectively applying just S2 content within the S1 framework), deferring other sustainability topics. This recognizes that climate data infrastructure is more mature than data systems for other sustainability topics.
Long-term, full application of both standards is expected. As the ISSB develops additional topical standards (biodiversity and human capital are under research), S1 will be the framework through which those standards operate, just as S2 operates within S1 for climate.
Can You Use Both?
You must use both — that's how they're designed. S1 provides the rules of the road; S2 provides the climate-specific destination. Every IFRS S2 disclosure is also an IFRS S1 disclosure. The two standards share the same governance, strategy, risk management, and metrics structure.
In practice, a company's ISSB-compliant sustainability disclosure is a single document or set of disclosures that applies S1's general requirements across all material sustainability topics, with S2's specific requirements applied to the climate component. There are no separate "S1 reports" and "S2 reports" — there is one integrated sustainability disclosure.
Council Fire's Perspective
The S1/S2 architecture is elegant: a general framework that scales as new topical standards are added, with climate as the first and most mature module. We advise clients to build their reporting infrastructure around S1's general architecture — governance documentation, risk management processes, materiality assessment methodology — and then populate it with S2's climate-specific content as the first implementation.
The first-year transition relief (report only on climate) is a practical gift. Organizations should use that first year to build robust climate disclosures under S2, then expand to other sustainability topics under S1 in subsequent years. Trying to address all financially material sustainability topics in year one, without the data infrastructure, leads to thin disclosures across many topics rather than strong disclosures where they matter most.
Frequently Asked Questions
Can I comply with S2 without S1?
No. S2 is applied in conjunction with S1 — it builds on S1's foundational requirements for materiality, reporting principles, and general disclosure. However, you can use S1's first-year transition provision to limit your sustainability disclosures to climate only, effectively reporting S2 content within the S1 framework while deferring other sustainability topics.
How does S1 determine what non-climate topics to report on?
S1 requires entities to disclose sustainability-related risks and opportunities that could reasonably be expected to affect enterprise value. To identify these, entities consider SASB Standards for their industry, relevant guidance from other standard-setters (including GRI), and their own assessment of what sustainability topics create financial risks or opportunities. There is no closed list — the entity exercises judgment within the financial materiality framework.
When will the ISSB issue more topical standards like S2?
The ISSB launched research projects on biodiversity, ecosystems, and ecosystem services as well as human capital in 2024. However, the ISSB has not committed to a specific timeline for issuing additional topical standards. In the meantime, S1 requires entities to address all financially material sustainability topics using available guidance, including SASB industry metrics for non-climate topics.
How do S1 and S2 interact with ESRS?
IFRS S1 and S2 address financial materiality for investor audiences. ESRS requires double materiality (impact and financial) for a broader stakeholder set. Jurisdictions adopting ISSB as a baseline can layer ESRS-style impact requirements on top. The EU uses ESRS rather than ISSB directly, but EFRAG has published interoperability guidance showing high alignment on the financial materiality dimension.
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