ISSB: Exposure Draft proposing targeted amendments to IFRS S2

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ISSB: Exposure Draft proposing targeted amendments to IFRS S2

• 02 May 2025
• Sustainability Reporting
• South African Accounting Academy

Summary:

The ISSB has published an Exposure Draft proposing targeted amendments to IFRS S2 Climate-related Disclosures that would provide reliefs to ease application of requirements related to the disclosure of greenhouse gas (GHG) emissions and clarifies GHG emissions measurement.

Article:

These proposed amendments, which respond to specific application challenges, are part of the ISSB’s commitment to support the implementation of ISSB Standards. The amendments are not focused on reductions in disclosures about GHG emissions but are instead making it easier for companies to apply the Standards while retaining the decision-usefulness of information provided to investors.

The proposed amendments relate to the application of GHG emissions disclosure requirements in IFRS S2, including:

• relief from measuring and disclosing Scope 3 Category 15 GHG emissions associated with derivatives and some financial activities;
• relief from the use of the Global Industry Classification Standard (GICS), in some circumstances, in disclosing disaggregated financed emissions information;
• clarification on the jurisdictional relief to use a measurement method other than the Greenhouse Gas Protocol for measuring GHG emissions; and
• permission to use jurisdiction-required Global Warming Potential (GWP) values that are not from the latest Intergovernmental Panel on Climate Change (IPCC).

With optionality embedded in the design of the amendments, entities can choose whether to apply the reliefs, and jurisdictions can choose whether to adopt them without affecting their degree of alignment with ISSB Standards.

The reliefs would support preparers in applying IFRS S2 by reducing the risk of potential duplication of reporting and the related costs associated with applying the Standards.

The deadline for comments is 27 June 2025.

As part of its transparent and robust standard-setting process, the ISSB will move forward with final amendments after having gathered and analysed stakeholder feedback on the Exposure Draft. The ISSB aims to finalise these amendments by the end of 2025, subject to stakeholder feedback.

Companies currently applying IFRS S1 and IFRS S2 as issued in June 2023 can continue to do so, while jurisdictions that have their own Standards that are ‘based on’ ISSB Standards will be encouraged to maintain consistency to make it more straightforward for preparers globally to report on an efficient basis and to ensure the global baseline is maintained.

The 25-page Basis for Conclusions on Exposure Draft Amendments to Greenhouse Gas Emissions Disclosures can be downloaded at https://www.ifrs.org/content/dam/ifrs/project/amendments-greenhouse-gas-s2/issb-ed-2025-1-greenhouse-gas-s2-bc.pdf

Click here to download the 24-page Exposure Draft:

https://www.ifrs.org/content/dam/ifrs/project/amendments-greenhouse-gas-s2/issb-ed-2025-1-greenhouse-gas-s2.pdf

Relevance to Auditors, Independent Reviewers & Accountants:

• As an auditor and independent reviewer, your clients need to comply with IFRS and the relevant disclosure requirements – specifically regarding GHG emissions. This means that you need knowledge of the impact of amendments to IFRSs that are approved as well as when they become effective.
• Failure to adhere to International standards on Sustainability may be interpreted as con-compliance with a financial reporting framework, and may influence the opinion/conclusion expressed on the annual financial statements.
• As an auditor, compiler and independent reviewer, you should be aware of proposed changes to existing IFRS standards issued by the standard-setting bodies, e.g. the IAASB, ISSB, etc.

Relevance to Your Clients:

• Applies to any entity that is required, or chooses, to prepare general purpose financial statements.
• General purpose financial reporting encompasses—but is not restricted to—an entity’s general purpose financial statements and sustainability-related financial disclosures.
• Failure to adhere to International standards on Sustainability may be interpreted as con-compliance with a financial reporting framework, and may influence the opinion/conclusion expressed on the annual financial statements.
• Compilers of annual financial statements must have knowledge of the impact of amendments to IFRSs that are approved as well as when they become effective.

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