IFRS Foundation_Guide when reporting climate-related disclosures

IFRS Foundation_Guide when reporting climate-related disclosures

• 25 February 2025
• Sustainability Reporting
• South African Accounting Academy

Summary:

The IFRS Foundation has published a new guide, Applying IFRS S1 when reporting only climate-related disclosures in accordance with IFRS S2, which aims to help companies understand how to report only climate-related information when applicable using International Sustainability Standards Board (ISSB) Standards.

Article:

In the first annual reporting period in which an entity applies [IFRS S1], the entity is permitted to disclose information on only climate-related risks and opportunities (in accordance with IFRS S2) and consequently apply the requirements in [IFRS S1] only insofar as they relate to the disclosure of information on climate-related risks and opportunities. If an entity uses this transition relief, it shall disclose that fact.

The publication of this guide is part of the ISSB’s commitment to supporting the implementation of ISSB Standards, helping companies to prepare information and helping investors to receive decision-useful information.

This educational material explains the application of IFRS S1 when a company reports only on climate related risks and opportunities in accordance with IFRS S2. This means a company:

• applies the requirements in IFRS S1 insofar as they relate to the disclosure of information on climate related risks and opportunities; and
• applies the requirements in IFRS S2 to report on climate-related risks and opportunities.

When the ISSB was developing IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures, investors said they urgently needed climate-related information to inform decision making, and some stakeholders expressed concerns about data availability and companies’ readiness to provide information about other sustainability-related risks and opportunities.

In response to these concerns, the ISSB decided to provide transition reliefs in ISSB Standards, including the ‘climate-first’ transition relief, which is the focus of this new guide. When providing only climate-related information in accordance with ISSB Standards, companies are required to apply related requirements in IFRS S1.

Click here to download the 14-page Guide:

https://www.ifrs.org/content/dam/ifrs/supporting-implementation/issb-standards/applying-ifrs-s1-reporting-only-climate-related-disclosures-accordance-ifrs-s2.pdf

Relevance to Auditors, Independent Reviewers & Accountants:

• Your clients, who are preparers of financial statements should be aware of the latest guidance issued by regulators, e.g. IFRS Foundation, ISSB, etc.
• This guide will help preparers understand which requirements in IFRS S1 are applicable when a company discloses information on only climate-related risks and opportunities in accordance with IFRS S2. The educational material reflects the intended approach to disclosing information on only climate-related risks and opportunities that is permitted by ISSB Standards.
• As an auditor, independent reviewer, accountant or practitioner, you ned to be aware of the latest guidance issued by relevant regulators, such as the IFRS Foundation.

Relevance to Your Clients:

• This guide will be a useful tool for companies, particularly in jurisdictions without regulatory requirements to apply ISSB Standards, including providing guidance on how companies can report on climate-related disclosures.
• Preparers of financial statements should be aware of the latest guidance issued by regulators, e.g. IFRS Foundation, ISSB.

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