ISSB Standards for ESG Reporting - Guidelines

» IFRS S1 — General Requirements for Disclosure of Sustainability

Purpose and Status of IFRS S1

IFRS S1 establishes foundational presentation and disclosure principles for sustainability‑related financial information. It is designed to be applied together with topic‑specific ISSB Standards (for example, IFRS S2 on climate). Compliance with IFRS S1 is a prerequisite for stating full compliance with all IFRS Sustainability Disclosure Standards.

Objective of the Standard

According to this Standard an enterprise has to provide all the pertinent details of material sustainable class risks and opportunities that are likely to have an effect on the cash inflows, chances of financiers supporting them or the mobilization costs within whatever short, medium or long a term one is looking at. Such details must be enough for the current shareholders or creditors as well as the existing and the potential ones (or the primary users) so that they can decide whether they are going to give the entity resources.

Key points

• Focus on information that could influence economic decisions, not on wider sustainability impacts per se.
• Reinforces the view that sustainability‑related matters are financially material when they can affect enterprise value.

Scope

• IFRS S1 is applied when an entity elects (or is required) to prepare sustainability‑related disclosures in accordance with ISSB Standards.
• It covers all sustainability‑related risks and opportunities reasonably expected to influence prospects. Items outside that threshold are outside the scope of required disclosure.
• The Standard can be applied regardless of whether the related financial statements are prepared under IFRS Accounting Standards or another GAAP.

Conceptual Foundations

Fair Presentation
An entity’s sustainability‑related financial disclosures must fairly present its sustainability‑related risks and opportunities. Fair presentation is achieved by compliance with IFRS S1 and any other applicable ISSB Standards, combined with:

• Completeness — no material omissions.
• Neutrality — free from bias.
• Accuracy — free from material error.

Materiality
Information is material if omitting, misstating or obscuring it could reasonably influence the decisions of primary users. The assessment is entity‑specific and requires judgement. The Standard emphasises that materiality for sustainability‑related information is assessed through the lens of enterprise value.

Reporting Entity
Sustainability disclosures ought to encompass the same entity for reporting as the related general-purpose financial statements. This include the entity itself and its consolidated subsidiaries, joint ventures, and associates; or as specified otherwise.

Connected Information
Disclosures should enable users to understand:

• Connections among different sustainability topics (for example, how water risk links to climate risk), and
• Connections between sustainability‑related financial information and the monetary amounts in the financial statements.

Core Content Pillars

IFRS S1 groups disclosure requirements into four inter‑related pillars that mirror the structure popularised by the TCFD framework.

Governance
Entities must describe the governance processes, controls and procedures used to monitor and manage sustainability‑related risks and opportunities, including:

• The role of the board or equivalent oversight body.
• Management’s role, including reporting lines and expertise.
• The frequency with which the board is informed.
• How governance is integrated with strategic planning and risk management.

Strategy
Disclosures must explain:

• The sustainability‑related risks and opportunities shall be disclosed over a short, medium and long term.
• The way these risks and opportunities affect the Enterprise’s business Model and the value chain.
• The effects on strategy and decision‑making, including resource allocation and capital expenditure plans.
• The resilience of the entity’s strategy under different conditions, supported where relevant by scenario analysis.

Risk Management
The entity shall disclose:

• Its processes for identifying, assessing and prioritising sustainability‑related risks and opportunities.
• How those processes are integrated into the entity’s enterprise risk management (ERM) system.
• Changes in processes or assumptions from the previous reporting period.

Metrics and Targets
An entity must disclose the metrics and targets used to assess, manage and monitor sustainability‑related risks and opportunities, including:

• Performance indicators (quantitative and qualitative).
• Targets set by the entity or imposed by regulation/law, expressed in absolute and, where relevant, intensity terms.
• Progress towards those targets, including baselines and methodologies.

General Requirements for Disclosure

Sources of Authoritative Guidance
When a matter is not specifically addressed by an ISSB Standard, preparers must apply judgement and shall consider the disclosure topics in the SASB Standards. Preparers may also consider:

• CDSB Framework application guidance,
• Other standard setter pronouncements (for example, GRI, ESRS), and
• Investor‑or industry‑led frameworks and benchmark practices.

Location and Timing of Disclosures

• Sustainability‑related data associated with financial outcomes falls under the financial report to be prepared for general purposes.
• This should be done along with the issuance of financial statements for the same reporting period.
• Publishing companies can allow their authors to refer to information that is to be found in such and such document, but only if this document is publicly and easily accessible and the material being referred to is specifically referred to.

Comparative Information and Statement of Compliance

• Entities must present comparative information for the preceding period.
• An explicit and unreserved statement of compliance with IFRS Sustainability Disclosure Standards is permitted only when all applicable Standards have been complied with.

Judgements, Estimation Uncertainty and Errors

Entities must disclose:

• The significant judgements and assumptions made in applying IFRS S1.
• Information about measurement uncertainty that has a significant risk of resulting in material adjustment within the next financial year.
• The nature and amount of prior‑period errors corrected and the effect of corrections on each prior period presented.

Effective Date and Transition

• IFRS S1 is effective for annual periods beginning on or after 1 January 2024. Earlier application is permitted.

A first‑time adopter may — in its first year of application — limit disclosures to climate‑related information (IFRS S2) and may delay publication of sustainability disclosures by up to nine months after the financial statements, provided certain conditions are met.

» IFRS S2 – Climate-related Disclosures

Purpose and Status of IFRS S2

IFRS S2 sets mandatory disclosure requirements about an entity’s climate-related risks and opportunities. It is designed to be applied together with IFRS S1. Compliance with both Standards is needed for an unreserved statement of conformity with IFRS Sustainability Disclosure Standards.

Objective of the Standard

• Require entities to disclose information about climate-related risks and opportunities useful to providers of capital in their decision-making .
• Focus on matters that could reasonably affect cash flows, access to finance or cost of capital over short, medium or long term .

Scope

• Applies to climate-related physical risks and transition risks, and to climate-related opportunities .
• Excludes climate-related risks and opportunities not expected to affect the entity’s prospects .

Core Content Pillars

IFRS S2 carries forward the four-pillar architecture also used in IFRS S1.

Governance

• Identify the board, or other equivalent body, that has the capacity to oversee the risks and opportunities that arise from changes in climate.
• Explain the mechanisms that the body ensures it has adequate skills and training in place, the interval of time after which information is relayed to this body and the primary consideration regarding strategic and risk decisions that is climate adaptation. 
• Define the relationship between the management of the enterprise and the delegation of duties and design of internal controls.

Strategy

• Disclose climate-related risks and opportunities over short, medium and long term.
• Describe impacts on business model, strategy and financial planning.
• Provide resilience analysis, supported by qualitative or quantitative scenario analysis appropriate to the business context.

Risk Management

• Focus on the main steps followed to determine, evaluate, rank and keep track of climate-related risks. Methods utilized in such processes include scenario analysis, materiality thresholds, and others.
• Describe processes for climate-related opportunities.
• Clarify integration with the entity’s broader enterprise risk management framework.

   

Metrics and Targets

• Disclose cross-industry metric categories: greenhouse-gas emissions, assets exposed to transition and physical risks, opportunities alignment, capital deployment, internal carbon prices and remuneration links.
• Provide industry-based metrics as relevant, referencing the Industry-Based Guidance.
• Present climate-related targets (gross and net) and progress, including baseline, scope, milestones and reliance on carbon credits.

Cross-Industry Metrics Overview

• Greenhouse-gas emissions: absolute gross Scope 1, Scope 2 and Scope 3 (with category breakdown for Scope 3 and financed emissions for financial institutions).
• Exposure to transition risk: amount and percentage of assets or business activities vulnerable to transition risk.
• Exposure to physical risk: amount and percentage of assets or business activities vulnerable to physical risk.
• Climate-related opportunities alignment: amount and percentage of assets or activities aligned with opportunities.
• Capital deployment: expenditure or investment directed toward climate-related risks and opportunities.
• Internal carbon price: price applied and areas of decision-making where used.
• Remuneration: description and percentage of executive pay linked to climate considerations.

Industry-Based Metrics and Guidance

• IFRS S2 is supplemented by a separate Industry-Based Guidance volume that maps SASB metrics to each of 11 sectors and 70-plus industries .
• Preparers refer to that guidance when selecting industry metrics, ensuring relevance to their activities.

Measurement Judgements and Use of Carbon Credits

• Targets: entities must distinguish gross from net emission targets; disclosure of a net target cannot obscure the related gross target.
• Carbon credits: entities disclose planned use of credits and any assumptions about permanence or integrity; information must clarify reliance on credits to achieve targets.

Effective Date and Transition Reliefs

• Effective for annual periods beginning on or after 1 January 2024; earlier application permitted, but only together with IFRS S1.
• First-year reliefs: (a) continued use of a non-GHG-Protocol method for GHG measurement; (b) exemption from Scope 3 emissions disclosure (including financed emissions) in the first year.
  

» IFRS S2 Industry-Based Guidance

Purpose of the Industry-Based Guidance

The Industry-Based Guidance (IBG) supports preparers in selecting and presenting industry specific metrics when applying IFRS S2. The metrics originate from the SASB Standards and are intended to reflect the most decision useful climate related information for investors in each industry.

How to Use This Guidance with IFRS S2?

• IFRS S2 paragraph 30 requires entities to disclose industry-based metrics when they are relevant to the entity’s activities.
• The IBG groups SASB metrics by sector and industry, providing the original SASB code, unit of measure, and indication of whether the metric addresses physical risk, transition risk, or opportunity.
• Preparers should review the full list for their primary industry or industries and apply judgement to determine which metrics are material to their business model and value chain.

Structure of the Document

The guidance is organised into eleven broad sectors. Each sector begins with a short narrative on sector-level climate themes, followed by separate subsections for each industry that include:

• A table of quantitative and qualitative metrics.
• Technical protocols explaining calculation boundaries.
• Context paragraphs that clarify why the metric is relevant to enterprise value.

Sector Overview

Below is a high-level map of the sectors, page ranges and industries covered. Detailed metric tables follow in Section 5.

Key Metrics by Sector and Industry

This section provides a concise summary of the principal climate-related metrics for each industry. Preparers should refer to the IBG PDF for full metric descriptions and technical protocols.

Consumer Goods

Apparel Footwear and Accessories

• Percentage of Tier 1 supplier facilities audited for environmental compliance.
• Total weight of fabric waste generated and percentage diverted from landfill.
• Scope 1 and Scope 2 greenhouse gas emissions of owned manufacturing operations.

E Commerce

• Total electricity consumed in fulfilment centers, percentage from renewable sources.
• Average grams of CO2e per customer order shipped.

Household and Personal Care Products

• Water withdrawn in regions with high baseline water stress.
• Revenue from products designed with recycled or bio based packaging.

Extractives and Minerals Processing

Oil and Gas Exploration and Production

• Methane emissions as a percentage of natural gas production.
• Volume of hydrocarbon spills greater than one barrel.

Metals and Mining

• Energy intensity in gigajoules per tonne of metal produced.
• Percentage of proved and probable reserves in countries requiring free prior and informed consent of indigenous peoples.

Financials

Commercial Banks

• Financed emissions for on balance sheet lending portfolio, disclosed by sector.
• Percentage of loans in industry segments with high transition risk.

Asset Management and Custody Activities

• Portfolio carbon footprint measured as weighted average carbon intensity.
• Percentage of assets under management covered by active climate stewardship programs.

Food and Beverage

Meat Poultry and Dairy

• Total greenhouse gas emissions intensity per kilogram of product, including enteric fermentation and manure management.
• Percentage of animal feed sourced from suppliers with verified deforestation free commitments.

Beverage Production

• Total water withdrawn, percentage in regions with high water stress.
• Packaging material recycled content percentage.

Health Care

Biotechnology and Pharmaceuticals

• Hazardous waste generated per million dollars of revenue.
• Percentage of facilities located in 500 year flood zones.

Infrastructure

Electric Utilities and Power Generators

• Percentage of net generation from renewables.
• Carbon intensity of electricity sold (kg CO2e per MWh).

Real Estate

• Operational energy intensity of managed assets (kWh per square meter).
• Percentage of floor area certified under green building standards.

Renewable Resources and Alternative Energy

Solar Technology and Project Developers

• Life cycle greenhouse gas emissions per kilowatt hour produced by installed projects.
• Percentage of manufacturing energy sourced from renewables.

Resource Transformation

Chemicals

• Process greenhouse gas emissions per tonne of production.
• Percentage of revenue from products designed to enable carbon reduction for customers.

Services

Hotels and Lodging

• Energy use intensity (kWh per occupied room).
• Percentage of property portfolio located in areas of high chronic heat risk.

Technology and Communications

Software and IT Services

• Energy consumed by owned data centers (MWh).
• Average power usage effectiveness (PUE) of data centers.

Transportation

Airlines

• Total Scope 1 greenhouse gas emissions per revenue passenger kilometer.
• Percentage of jet fuel from sustainable aviation fuel (SAF).

Road Transportation

• Percentage of fleet composed of alternative fuel vehicles.
• Average grams CO2e per kilometer traveled for delivered parcels.

Adaptation Notice under the International Sustainability Standards Board (ISSB)

This text has been adapted in accordance with the guidelines set forth by the International Sustainability Standards Board (ISSB). In our efforts to ensure transparency, accountability, and alignment with sustainable practices, we have carefully reviewed and incorporated ISSB principles into the content. This adaptation process reflects our commitment to high-quality, accurate, and comprehensive sustainability reporting, ensuring that the information presented adheres to internationally recognized standards.

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