For years, companies have faced a maze of sustainability disclosure frameworks - TCFD, SASB, CDP, GRI, CSRD. For the first time, we have a globally accepted baseline for climate reporting. Here's what it's about.

Summary

  • IFRS S2 unifies fragmented reporting standards by providing a global baseline for climate-related disclosures, addressing inconsistencies caused by the earlier patchwork of frameworks.

  • The standard bridges climate and financial reporting, requiring disclosures on governance, strategy, risk management, and metrics tied to climate impact, ensuring data is comparable and decision-useful for investors.

  • Adoption is accelerating, with 17 jurisdictions finalised and 16 more in progress, indicating strong global momentum towards standardised sustainability reporting.

  • Corporates benefit by aligning early, gaining access to sustainable finance, improving investor trust, and preparing for emerging regulations, IFRS S2 is now seen as the floor, not the ceiling, of climate disclosure

 

For years, companies have faced a maze of sustainability disclosure frameworks - TCFD, SASB, CDP, GRI, CSRD. Each served an important purpose, but together they’ve created an “alphabet soup” of overlapping standards and fragmented expectations. 

The result? Corporates struggled with inconsistent reporting, while investors lacked comparability across global markets. What might’ve been counted within the calculations for one country’s boundaries of Scope 2 measurement, could be excluded from another’s.

The launch of the International Sustainability Standards Board (ISSB) by the global financial accounting authority, IFRS, has marked a turning point. For the first time, we have a globally accepted baseline for climate reporting - a single, coherent framework that builds on the best of what came before and offers unprecedented clarity and focus to both companies and capital markets.

In 2023, ISSB released its first two standards:

  • IFRS S1: General requirements for disclosure of sustainability-related risks and opportunities.
  • IFRS S2: A dedicated climate disclosure standard.

IFRS S2 requires companies to disclose information on how climate-related risks and opportunities affect their financial position, performance, and cash flows. It is structured around four pillars: 1) Governance, 2) Strategy, 3) Risk Management, and 4) Metrics & Targets, and explicitly builds on the Task Force on Climate-related Financial Disclosures (TCFD) framework.

By mandating disclosure of both current and anticipated financial effects, IFRS S2 has bridged sustainability reporting and financial statements. This is what investors have long called for: decision-useful data they can compare across markets and sectors.

From Fragmentation to Global Alignment

Rather than adding to the confusion, ISSB consolidates.

IFRS S2 incorporates lessons from existing standards while eliminating duplication. The result is a global baseline that regulators from the UK to Singapore, Japan and Australia have adopted and other countries are adopting. In 2023, the International Organization of Securities Commissions (IOSCO) endorsed IFRS S1 & S2, unlocking national legislation; as of June 2025, IFRS S2 adoption is underway in 36 jurisdictions. 

The following 17 jurisdictions have finalised adoption/use of IFRS S2

  • Europe: United Kingdom
  • Asia-Pacific: Australia, Bangladesh, Hong Kong SAR, Malaysia, Pakistan, Sri Lanka, Taiwan, Türkiye
  • Americas: Brazil, Chile, Mexico
  • Africa: Ghana, Kenya, Nigeria, Tanzania

While 16 more jurisdictions are in progress

  • Europe: Switzerland
  • Asia-Pacific: China, Japan, Philippines, Thailand, Indonesia, Singapore, South Korea
  • Americas: Bolivia, Canada, Costa Rica, El Salvador
  • Africa: Zambia, Rwanda, Uganda, Zimbabwe

For corporates, this means moving away from juggling multiple voluntary and mandatory frameworks to aligning with the new global baseline. For investors, it means more consistent, comparable disclosures that help assess sustainability risks and opportunities across markets.

 

Why IFRS S2 Matters for Corporates

IFRS S2 matters to corporates because it matters to a key stakeholder in every company’s financial governance - investors. 

For investors, IFRS S2 provides comparability at scale. Whether they are analyzing a bank in Singapore, a manufacturer in Europe, or a tech company in the US, investors can expect disclosures that are much more standardized, decision-relevant, and tied to financial outcomes. This allows them to effectively benchmark how a company is performing on climate reporting relative to others they have a financial interest in.

By aligning early, corporates would be on track to:

  • Safeguard market access: Climate disclosures now factor into more government tenders and procurement decisions.
  • Unlock sustainability-linked finance: Financial institutions scrutinize a company’s corporate governance alongside their financial performance. Demonstrating commitment through action is a means of unlocking transition finance, if allowed to blossom.
  • Build external trust: Demonstrating climate disclosure readiness reassures investors, customers, and regulators that the company is prepared for transition risks and well placed to capture growth opportunities.

At Terrascope, we see IFRS S2 as a strategic lever, going beyond just reporting requirements. When climate reporting has been simplified and standardized, companies can focus on what really matters - decarbonizing, innovating, and driving growth in a low-carbon economy hungry for greater climate accountability.

The Global Baseline, with Room to Grow

Something I have recently seen across numerous companies, especially ones starting out on their journey, is how they often treat IFRS S2 as the pinnacle of stringency, treating reporting as a value and compliance exercise rather than a more holistic one. Instead, I encourage clients to think of IFRS S2 as the “new floor,” the de-facto baseline for climate reporting.

For example, regions such as the EU are already augmenting IFRS S2 with further requirements via the likes of the Corporate Sustainability Reporting Directive, or “CSRD”).

Following IFRS S2 ensures that no matter where a company operates, it reports to a common baseline investors can rely on. For example, IFRS S2 requires that companies measure their greenhouse gas emissions across Scopes 1, 2 & 3 applying the Greenhouse Gas Protocol Corporate Standard (2004) unless a jurisdiction mandates otherwise. With countries like Australia and Japan adopting IFRS S2, we’re seeing convergence in markets that previously had their own nuanced approaches.

This balance between global consistency and regional ambition makes ISSB’s approach both practical and powerful - allowing countries to adapt these standards when needed to local realities. 

How Corporates Can Get Ready for IFRS S2 Today

The good news is that preparing for IFRS S2 doesn’t require starting from scratch. Here is my advice to companies and, in particular, first-time reporters:

  1. Assess current disclosures – Conduct a self-assessment against IFRS S2 requirements to identify gaps and align on actions.

  2. Strengthen emissions data – Ensure accurate, auditable Scope 1, 2, and 3 data collection across the value chain, since IFRS S2 requires full greenhouse gas reporting.

  3. Engage finance and sustainability teams together – Break silos so climate risks and opportunities are evaluated alongside financial performance.

  4. Embed climate into governance – Ensure the board and senior management are actively overseeing climate-related risks and opportunities.

  5. Pilot scenario analysis – Use climate scenarios to test the resilience of your business strategy and inform disclosures; some companies start with one business unit or operational emissions and expand from there.

At Terrascope, we help companies do exactly this, transforming complex supply chain emissions data into clear, decision-useful insights. With MC Agri Alliance, for example, our collection of detailed activity data and emissions drivers revealed a critical decarbonisation opportunity for the company’s operations. Unlocking as much as 25% emissions reduction in processing emissions, our simulations showed the possible emissions generated simply by changing the processing location and transportation route of a key commodity. Such a strategy has also been cost effective, with less fuel used in transportation translating directly to cost savings. 

If you’re curious how to turn disclosure into a strategic advantage, speak to us today. Learn how you can build trust with investors, unlock capital, and accelerate your transition to net zero.