The International Sustainability Standards Board (ISSB) has published an Exposure Draft outlining proposed amendments to IFRS S2 Climate-related Disclosures. The draft aims to reduce complexity and ease the application burden for companies implementing the global baseline for climate reporting, while maintaining the decision-useful information required by investors.
The key proposed amendments include:
- Financial Sector Emissions Exemption: Companies would receive a temporary exemption from disclosing Scope 3 greenhouse gas (GHG) emissions associated with financed activities, investments, insurance underwriting, and asset management. This addresses significant measurement challenges in these complex areas.
- Enhanced Flexibility in GHG Reporting: Entities would gain increased flexibility in structuring their GHG emissions disclosures, allowing for presentation alongside other sustainability or financial information if clearly labelled and reconciled.
- Alternative Measurement Methodologies: Companies would be permitted to use jurisdiction-specific GHG measurement methodologies as an alternative to the GHG Protocol, provided these methodologies result in emissions measurements meeting the criteria outlined in IFRS S2.
- Acceptance of Local Conversion Factors: Entities could utilize jurisdiction-specific GHG emission conversion factors (e.g., for energy consumption) even if those factors are not based on the most recent internationally accepted sources (like the IPCC factors), reducing immediate implementation hurdles.
Crucially, these proposed reliefs are optional. Jurisdictions or individual companies can choose to adopt them without jeopardizing alignment with the core requirements of IFRS S2. The ISSB emphasizes that these targeted amendments are designed to facilitate adoption while preserving the global comparability and relevance of climate-related disclosures for investors.
Implementation Timeline:
- The Exposure Draft is open for public comment until 27 June 2025.
- Final amendments are anticipated by the end of 2025.
- Companies already applying IFRS S1 and S2 (issued in 2023) are not required to adopt these amendments immediately and can continue using the original standards.
The ISSB strongly encourages jurisdictions that have adopted or are basing requirements on ISSB Standards to consider implementing these amendments to maintain global consistency and reduce complexity for multinational entities.
Source: IFRS Foundation, 28 April 2025.