ISSB Introduces IFRS S2 Relief to Simplify Climate Disclosure Compliance

The International Sustainability Standards Board (ISSB) has recently unveiled an Exposure Draft that proposes significant amendments to the IFRS S2 Climate-related Disclosures Standard. This initiative is designed to ease the reporting burden for companies focused on greenhouse gas (GHG) emissions, reflecting the ISSB’s commitment to enhancing transparency and reliability in sustainability reporting.

Key Amendments Proposed by the ISSB

The Exposure Draft, developed in response to market feedback, introduces several practical relief measures aimed at clarifying reporting requirements while ensuring the quality of information available to investors remains intact. Some of the key changes include:

• Exemption for Scope 3 Category 15 emissions: Companies will be relieved from measuring and disclosing emissions related to derivatives and certain financial activities.
• Flexible Reporting Standards: Exemptions from using the Global Industry Classification Standard (GICS) for specific cases in disaggregated financed emissions reporting will be provided.
• Clarification on Emission Measurement Protocols: The draft outlines alternative jurisdictional methods to the Greenhouse Gas Protocol for emission measurements.
• Use of Local GWP Values: Entities are allowed to use jurisdiction-mandated Global Warming Potential (GWP) values that may differ from the latest figures provided by the Intergovernmental Panel on Climate Change (IPCC).

Aiming for Simplicity and Consistency

The proposed amendments aim to reduce complexity and lower compliance costs for preparers while maintaining alignment with broader ISSB Standards. The Exposure Draft also introduces flexibility, allowing entities and jurisdictions to decide on the application of these reliefs, which will not compromise alignment with the global baseline of the Standards.

Insights from ISSB Leadership

ISSB Vice-Chair Sue Lloyd emphasized the board’s role in responding to market feedback during the early stages of implementation. She stated, “It is the role of a responsible standard-setter to listen to market feedback from the earliest implementation stages, and to support preparers in the application of our Standards.” This reflects the ISSB’s commitment to facilitating the provision of decision-useful information to investors without causing unnecessary disruption.

Comment Period and Next Steps

The 60-day comment window for the Exposure Draft will close on 27 June 2025. The proposed amendments are informed by insights gathered from the Transition Implementation Group on IFRS S1 and IFRS S2, along with ongoing discussions with global jurisdictions throughout the adoption process.

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