IFRS S1 and S2 Disclosure Checklist for Preparers (2026)
If your team is preparing sustainability-related financial disclosures under the ISSB Standards for the first time, or tightening up a second-year report, this checklist is built for you. It maps every required disclosure element across IFRS S1 and IFRS S2, flags the transition reliefs still available, and calls out the gaps that Big-4 checklists typically leave open.
Key takeaway: IFRS S1 and IFRS S2 must always be applied together. You cannot report climate disclosures under IFRS S2 without simultaneously satisfying the general requirements in IFRS S1. Every item below reflects that joint obligation.
What Do IFRS S1 and S2 Actually Require Preparers to Disclose?
IFRS S1 sets the framework; IFRS S2 specifies the climate detail. IFRS S1 requires an entity to disclose material information about all sustainability-related risks and opportunities across four content pillars: governance, strategy, risk management, and metrics and targets. IFRS S2 then applies those same four pillars specifically to climate, adding granular requirements for physical and transition risks, scenario analysis, and greenhouse gas (GHG) emissions.
The ISSB issued both standards in June 2023, with an effective date of annual reporting periods beginning on or after 1 January 2024. Entities applying the standards under a local endorsement mechanism must check their jurisdiction's specific effective date.
For a deeper explanation of each pillar's requirements, see our complete 2026 guide to IFRS S1 and S2 disclosure requirements.
The Four-Pillar Structure: What Each Standard Demands
Both IFRS S1 and IFRS S2 are organised around the same four content pillars. The table below maps the high-level disclosure objective for each pillar under each standard.
| Pillar | IFRS S1 (all sustainability topics) | IFRS S2 (climate-specific additions) |
|---|---|---|
| Governance | Disclose the body/individual(s) responsible for oversight of sustainability-related risks and opportunities; management's role in assessing and managing them | Same structure applied to climate; disclose whether climate expertise exists at governance level or is accessed externally |
| Strategy | Describe sustainability-related risks and opportunities, their time horizons, and how they affect the business model, value chain, strategy, and financial position | Describe climate-related physical and transition risks; disclose how climate affects financial statements; include quantitative scenario analysis (qualitative permitted in year 1 with relief) |
| Risk Management | Describe processes for identifying, assessing, prioritising, and monitoring sustainability-related risks and opportunities; explain integration into overall risk management | Same processes applied to climate; disclose how the entity determines whether a climate risk is significant |
| Metrics and Targets | Disclose metrics and targets used to measure and manage sustainability-related risks and opportunities, including cross-industry and industry-based metrics | Disclose Scope 1, 2, and 3 GHG emissions (Scope 3 relief available in year 1); climate-related transition plan metrics; internal carbon prices if used |
IFRS S1 Disclosure Checklist
Work through each item and confirm it is addressed in your sustainability report. Items marked with a relief note may be deferred or simplified in the first reporting period.
Governance
- Identity of the governance body or individual with oversight responsibility for sustainability-related risks and opportunities
- How that body exercises oversight: frequency of review, how it receives information, how it considers sustainability in strategic decisions
- Management's role in assessing and managing sustainability-related risks and opportunities
- Whether management uses controls and procedures to support disclosures, and how those are integrated into overall internal control
Strategy
- Description of each material sustainability-related risk and opportunity, including whether it is a risk or an opportunity
- Time horizon over which each risk or opportunity is expected to affect the entity (short, medium, long term), with the entity's own definition of those horizons
- Current and anticipated effects on the business model and value chain
- Current and anticipated effects on strategy and decision-making, including transition plans
- Current and anticipated financial effects: effects on financial position, financial performance, and cash flows (both current period and anticipated over short, medium, and long term)
- Degree of uncertainty in estimates and assumptions used
- Resilience of the entity's strategy and business model to sustainability-related risks
Risk Management
- Processes for identifying and assessing sustainability-related risks, including parameters used to define time horizons and to assess severity
- Processes for prioritising sustainability-related risks relative to other risks
- Processes for monitoring sustainability-related risks
- Whether and how the above processes are integrated into the entity's overall risk management process
- Processes for identifying and assessing sustainability-related opportunities
Metrics and Targets
- Cross-industry metric categories: GHG emissions, transition risks, physical risks, climate-related opportunities, capital deployment, internal carbon prices (if used), remuneration
- Industry-based metrics from the applicable SASB Standards (or other industry guidance referenced in IFRS S1)
- Entity-specific metrics used internally to measure and manage material sustainability-related risks and opportunities
- For each target: the metric used, the objective, the time horizon, the base period, milestones, and performance against the target
- Whether the target has been set by a third-party framework and which one
IFRS S2 Disclosure Checklist
IFRS S2 applies the four pillars to climate specifically and adds several requirements with no equivalent in IFRS S1.
Governance (Climate)
- Governance body oversight of climate-related risks and opportunities (same structure as IFRS S1, applied to climate)
- Whether the governance body has climate-related skills or expertise, or accesses them externally
- How climate-related considerations are factored into executive remuneration
Strategy (Climate)
- Climate-related physical risks (acute and chronic) that are material to the entity
- Climate-related transition risks (policy, legal, technology, market, reputational) that are material
- Climate-related opportunities material to the entity
- Current and anticipated financial effects of each material risk and opportunity on financial position, performance, and cash flows
- Climate resilience assessment using scenario analysis, covering at least two scenarios including a scenario consistent with limiting warming to 1.5°C
- Transition plan: current and anticipated effects on business model and strategy, including key assumptions and dependencies
- How climate-related risks and opportunities are reflected in financial statements (for example, in asset carrying amounts, provisions, or impairment)
Practical note on scenario analysis: In the first reporting period, entities may use qualitative scenario analysis rather than quantitative. This relief does not extend to subsequent periods. Build the quantitative capability now.
Risk Management (Climate)
- Processes for identifying and assessing climate-related risks, including how the entity determines whether a climate risk is significant
- How physical and transition risks are assessed across different time horizons
- Integration of climate risk processes into overall enterprise risk management
Metrics and Targets (Climate)
- Scope 1 GHG emissions (direct), disaggregated by constituent greenhouse gases and by consolidation approach (equity share or operational/financial control)
- Scope 2 GHG emissions (energy indirect), both location-based and market-based
- Scope 3 GHG emissions (all other indirect), across all 15 categories of the GHG Protocol, with the measurement approach disclosed
- GHG emissions intensity (absolute emissions per unit of economic or physical output)
- Percentage of assets or business activities exposed to physical and transition risks
- Capital expenditure, financing, or investment deployed toward climate-related risks and opportunities
- Internal carbon price per metric tonne of CO2e, if used in decision-making
- Percentage of executive remuneration linked to climate-related considerations
- Industry-based climate metrics from the applicable SASB industry standard
- Climate-related targets, including whether they are science-based, and progress against them
Transition Reliefs: What You Can Defer and for How Long
The ISSB built in several first-year reliefs. These are not permanent exemptions; they expire after the first annual reporting period.
| Relief | Available in year 1? | Condition |
|---|---|---|
| Scope 3 GHG emissions | Yes, may omit in year 1 | Must disclose in year 2 onward |
| Quantitative scenario analysis | Yes, qualitative permitted | Quantitative required from year 2 |
| Comparative information | Yes, prior-period figures not required in year 1 | Required from year 2 |
| Interim reporting timing | Yes, sustainability disclosures may be filed later than financial statements in year 1 | Concurrent filing required from year 2 |
| GHG Protocol alternative method | Yes, if jurisdiction requires a different GHG measurement method | Must disclose which method and why |
Entities that adopted for annual periods beginning 1 January 2024 are now in their second or third reporting cycle. Most of these reliefs have expired. If your entity adopted later under a local endorsement mechanism, confirm your jurisdiction's specific relief timeline.
The Gap the Other Checklists Leave Open: Connecting Disclosures to the Financial Statements
Most published checklists (including those from KPMG and EY) focus on the sustainability report itself. What they underemphasise is IFRS S1's explicit requirement to explain how sustainability-related risks and opportunities are reflected in the financial statements.
This means preparers need to:
- Identify which line items in the balance sheet, income statement, or cash flow statement are affected by material sustainability risks (for example, asset impairment from physical climate risk, provisions for carbon liabilities, or stranded-asset write-downs).
- Disclose the assumptions and estimates used, and the degree of uncertainty around them.
- Ensure consistency between the sustainability disclosures and the financial statements. If the sustainability report describes a material transition risk, the financial statements should reflect it, or the difference must be explained.
Auditors and assurance providers are increasingly focused on this consistency check. A disclosure that describes significant climate exposure but shows no corresponding financial statement impact will attract scrutiny.
Materiality: The Filter That Governs Everything
IFRS S1 uses a sustainability-specific materiality definition. Information is material if omitting, misstating, or obscuring it could reasonably be expected to influence decisions that primary users of general purpose financial reports make on the basis of those reports.
This is investor-focused materiality, not impact materiality. It differs from the double materiality concept used in the EU's CSRD and ESRS. If your entity reports under both frameworks, you will need to manage two distinct materiality assessments. The ISSB has acknowledged the interoperability challenge and published guidance on aligning IFRS S2 with ESRS, but the assessments remain separate exercises.
FAQ
Do IFRS S1 and S2 apply to all companies globally? No. The standards apply where a jurisdiction has adopted or endorsed them. As of mid-2026, jurisdictions including Australia, Canada, Nigeria, Singapore, and the UK have adopted or are implementing the ISSB Standards. Companies must check their local regulator's effective date and any modifications made during endorsement.
Can we apply IFRS S2 without IFRS S1? No. IFRS S1 and IFRS S2 must always be applied together. IFRS S1 sets the general requirements, qualitative characteristics, and materiality framework that govern all ISSB disclosures, including those required by IFRS S2.
What GHG protocol must we use for Scope 3? IFRS S2 requires entities to use the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard as the measurement basis, unless a jurisdiction mandates a different method. A first-year relief allows use of an alternative method if required by local regulation, provided the entity discloses which method it used and why.
How does IFRS S2 scenario analysis work in practice? Entities must assess climate resilience using at least two climate scenarios, one of which must be consistent with limiting global warming to 1.5°C above pre-industrial levels. The scenarios should be relevant to the entity's specific risks and geographies, not generic. In year 1, qualitative scenario analysis is permitted; quantitative analysis is required from year 2.
Where should IFRS S1 and S2 disclosures appear? IFRS S1 requires disclosures to be included in the general purpose financial report, which typically means the annual report. They must be clearly identified as sustainability-related financial disclosures and accessible to users at the same time as the financial statements (with limited timing relief in year 1).
How does this checklist relate to CSRD and ESRS? IFRS S1 and S2 use investor-focused (single) materiality; CSRD and ESRS use double materiality, which also captures impacts on people and the environment. The ISSB and EFRAG have published interoperability guidance, but entities subject to both frameworks must complete separate materiality assessments and map disclosures carefully to avoid gaps or contradictions.
The standards are live, the reliefs are expiring, and assurance requirements are tightening across jurisdictions. Getting the checklist right now saves significant rework when limited or reasonable assurance becomes mandatory.
