Honing in on useful (IFRS) guidance

The IFRS Foundation has been busy producing educational material and guidance for implementing the IFRS Sustainability Disclosure Standards. Here’s a useful round up, for reporting practitioners to get a clear view and easy access.

It seems like a lifetime ago that the IFRS Foundation 's International Sustainability Standards Board (ISSB) launched its two Sustainability Disclosure Standards, S1 and S2 (or IFRS SDS), in June 2023. Back then, they promised to also deliver educational material and guidance to support practitioners in their implementation of the standards. 

Suffice it to say, they have not disappointed. 

Now when it comes to guidance, I do believe it’s possible to have too much of a good thing, so my rule is to discriminate in favour of the most credible resources, and generally that means those coming straight from the standard-setters or regulators. The IFRS Foundation is a case in point.

I thought it would be useful for sustainability reporting practitioners to have a handy inventory of IFRS supporting materials. I have listed them by order of what I believe to be their relevance and usefulness. 

Sustainability-related risks and opportunities and the disclosure of material information (Nov 2024)

• Aims to help companies identify and disclose material information about ‘sustainability-related risks and opportunities that could reasonably be expected to affect their cash flows, their access to finance or cost of capital over the short, medium or long term’.
• Key takeaway: The IFRS SDS do not define material issues, but material information (using the capital markets definition that also applies to financial information); what we would commonly refer to as ‘material issues’ are described as ‘sustainability-related risks and opportunities that could reasonably be expected to affect an entity’s prospects’; the materiality assessment process refers to identifying and disclosing material information on these risks and opportunities.
• Usefulness=very high (must read); the concept of materiality is hard to grasp for pretty much everyone in the sustainability reporting space, yet foundational for sustainability disclosures targeting users of general purpose financial reports.

E-learning courses

• Aim to support companies in getting started with understanding the IFRS SDS; include a mix of written and visual content and interactive knowledge checks in four modules: Introduction to the IFRS Sustainability Disclosure Standards; Introduction to IFRS S1 General Sustainability-related Disclosures; Introduction to IFRS S2 Climate-related Disclosures; and Integrated sustainability disclosures and organisational considerations.
• You will need an IFRS.org account, which is free to get. 
• Usefulness=high; fulsome overview of the standards presented in an interactive format; probably a good place to start if you’re just beginning your IFRS SDS journey.

Disclosing information about anticipated financial effects applying ISSB Standards (Aug 2025)

• Aims to help companies understand the requirement to disclose information about anticipated financial effects when applying IFRS S1 and IFRS S2, using climate-related risks and opportunities as a focus topic. 
• Key takeaway: Explains the difference between current and anticipated financial effects; the first are likely to be reflected in the actual financial statements (income statement, balance sheet), while the second are not; this means that when explaining the connectivity between financial and sustainability performance, there may or may not be links to make with the financial statements, and there are times when the only place for information on financial effects to appear is the sustainability statements/report or the management commentary.
• Usefulness=high; addresses a key challenge for reporting practitioners of identifying and disclosing the effects of sustainability-related issues on financial performance.

Disclosing information about an entity's climate-related transition, including information about transition plans, in accordance with IFRS S2 (June 2025)

• Aims to help companies disclose climate-related transition information and plans in accordance with IFRS S2; builds on the Transition Plan Taskforce (TPT) Disclosure Framework and other resources, for which the IFRS Foundation took responsibility in 2024.
• Key takeaway: IFRS S2 does not require companies to have a transition plan nor to publish such a plan if they have one, but it does require them to disclose information about how they mitigate and adapt to climate-related transition and physical risks; information specific to transition planning or plans becomes relevant when companies have a strategic goal on how they intend to respond to transition and physical risks and climate-related opportunities, and thus contribute to the transition towards a lower-carbon and/or climate-resilient economy.
• Usefulness=high; climate transition plans are becoming an area of scrutiny as we move from commitments to actions to both mitigate and/or adapt to the effects of climate change.

Greenhouse Gas Emissions Disclosure requirements applying IFRS S2 Climate-related Disclosures (May 2025)

• Modelled in a question-and-answer style curiously reminiscent of the EFRAG implementation guidance documents. lt includes answers to questions about (i) disclosure requirements, (ii) measurement requirements, and (iii) other specific aspects of emissions-related requirements. 
• Usefulness=high; undoubtedly inspired by questions from practitioners seeking to apply IFRS S2.

Comparison—IFRS S2 with the TCFD Recommendations (updated Nov 2024)

• Offers a table comparison of the TCFD Recommendations and IFRS S2 (likely an excerpt of Progress on Corporate Climate-related Disclosures—2024 Report).
• Usefulness=high; demonstrates the full alignment of the IFRS SDS to the most widely referenced framework on climate disclosures globally.

Applying IFRS S1 when reporting only climate-related disclosures in accordance with IFRS S2 (Jan 2025)

• Aims to clarify confusion arising from the fact that technically, IFRS S1 is to be applied in conjunction with other IFRS SDS, however transition reliefs built into the standards allow companies to report only climate-related risks and opportunities in the first year (or two, in Canada) of implementing the IFRS SDS. 
• Usefulness=medium; helpful for those taking a climate-first approach to implementing the IFRS SDS, however a rather technical document.

ESRS–ISSB Standards Interoperability Guidance (May 2024)

• Aims to illustrate the high level of alignment between the IFRS SDS and the European Sustainability Reporting Standards (ESRS), explaining how companies can efficiently apply both sets of standards.
• Key takeaway: it makes sense that there be limited interoperability beyond the topic of climate change, given that the IFRS SDS are very limited in scope for now and the ESRS are much more comprehensive; therefore, going from applying ESRS to applying the IFRS SDS should be straightforward, but working in the opposite order will prove more challenging.
• Usefulness=medium; an efficiency gain for those needing or wanting to apply both sets of standards.

Using ISSB Industry-based Guidance when applying ISSB Standards (July 2025)

• Aims to help companies understand the role of ISSB industry-based guidance—in other words, the SASB Standards in the context of IFRS S1 and Industry-based Guidance on Implementing IFRS S2 in the context of IFRS S2—to identify both (i) sustainability-related risks and opportunities and (ii) information to disclose about those sustainability-related risks and opportunities. 
• Key takeaway: consideration of the applicability of the ISSB industry-based guidance is required, but its application itself is not required.  The defining criteria, as always, is relevance of topics (as risks or opportunities likely to affect financials) or materiality of information.
• Usefulness=low; once you’re familiar with the IFRS SDS, application of ISSB industry-based guidance isn’t particularly complex or difficult to understand. 

By the way, all IFRS Foundation supporting material can be found here.

Need to share your knowledge about the IFRS SDS? Introducing the ISSB Standards: better information for better decisions is a workshop resource comprising a slide deck and accompanying presenter's script, which provides a generic introduction to the IFRS SDS. It’s available for anyone to use to promote broader awareness and understanding of the IFRS SDS.