ISSB: IFRS S1 and IFRS S2

The International Sustainability Standards Board (ISSB) was announced by the IFRS Foundation at COP26 in Glasgow in November 2021. The IFRS Foundation already sets the accounting standards (IFRS) used in much of the world. The ISSB's job is to do the same for sustainability information: create one global baseline that investors can rely on.

In June 2023, the ISSB issued its first two standards: IFRS S1, on general sustainability-related disclosures, and IFRS S2, on climate. They are built for investors and use financial materiality: they ask what sustainability-related risks and opportunities could affect a company's cash flows, access to finance or cost of capital.

The ISSB brought several earlier frameworks under one roof. It absorbed the Climate Disclosure Standards Board and the Value Reporting Foundation, which ran the SASB Standards and the Integrated Reporting Framework. Its structure comes from TCFD.

IFRS S1: general requirements

• Disclose information about all sustainability-related risks and opportunities that could reasonably be expected to affect the company's prospects
• Use the four pillars: governance, strategy, risk management, and metrics and targets
• Report for the same entity and the same period as the financial statements, and publish at the same time
• Connect sustainability information with the financial statements
• Use the SASB Standards as a source of industry-specific guidance

IFRS S2: climate

• Governance: board and management oversight of climate risks and opportunities
• Strategy: effects on the business model and value chain, transition plans, and climate resilience tested with scenario analysis
• Risk management: how climate risks are identified, assessed and managed
• Metrics and targets: Scope 1, 2 and 3 emissions; amounts and shares of assets exposed to transition and physical risk; capital spent on climate opportunities; internal carbon prices; links to executive pay; industry-based metrics; and climate targets

Transition reliefs

In the first year of applying the standards, companies may report on climate only, skip comparative figures, delay Scope 3 reporting by a year, and keep using measurement methods other than the GHG Protocol where they already use them.

December 2025 amendments to IFRS S2

The ISSB issued targeted amendments in December 2025, effective for reporting periods beginning on or after 1 January 2027, with early application allowed:

• Scope 3 category 15 (investments) disclosures can be limited to financed emissions as defined in IFRS S2
• Banks and insurers can use industry classification systems other than GICS to break down financed emissions
• Relief where a jurisdiction requires part of a group to use methods other than the GHG Protocol
• Relief on the timing of moving to the latest IPCC global warming potential values

Adoption around the world

By April 2026, more than 40 jurisdictions had decided to use, or were taking steps to introduce, ISSB Standards, including Australia, Brazil, Canada, China, Japan, Kenya, Mexico, Nigeria and the UK.

India's position

SEBI has not adopted the ISSB Standards. India's mandatory framework remains the BRSR. ICAI's Sustainability Reporting Standards Board takes part in ISSB consultations. The Institute of Cost Accountants of India (ICMAI) has published two Indian Sustainability Standards, ISS 1 and ISS 2, adapted from IFRS S1 and S2, for use by companies reporting under BRSR. They are professional body standards and are not part of SEBI's rules.

Work in progress

The ISSB is preparing a non-mandatory practice statement on nature-related disclosures, drawing on the TNFD recommendations, with a draft planned for October 2026. It is also researching human capital disclosures, and updating SASB Standards for priority industries.