ISSB Sustainability Standards — IFRS S1 and IFRS S2

Strategic Compliance Impacts

The International Sustainability Standards Board (ISSB), operating under the IFRS Foundation, published IFRS S1 (general sustainability-related financial disclosures) and IFRS S2 (climate-related disclosures) in June 2023. These standards represent the first truly global baseline for sustainability disclosure integrated into financial reporting. IFRS S2 is explicitly built on the Task Force on Climate-related Financial Disclosures (TCFD) framework, incorporating its four pillars — governance, strategy, risk management, and metrics and targets — into a mandatory disclosure structure.

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Approximately 40 jurisdictions covering nearly 60% of global GDP have formally decided to incorporate or align with ISSB standards as of late 2025, including Australia, the United Kingdom (UK Sustainability Reporting Standards), Singapore, Japan, Hong Kong, Malaysia, and Brazil. First mandatory ISSB-aligned reports are being filed in 2026 in Australia, Hong Kong, and Malaysia, among others. The United Kingdom is phasing in its UK Sustainability Reporting Standards from 2026.

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For U.S. companies, ISSB adoption is relevant even in the absence of a federal U.S. mandate. Any company with operations in, sales to, or investors based in ISSB-adopting jurisdictions will face ISSB-aligned data requests — from customers running supply chain due diligence, from financial institutions evaluating ESG risk, and from investors applying ISSB-aligned analysis. The standard also provides the methodological backbone for multiple customer and investor questionnaires, including those tied to EcoVadis, CDP, and institutional investor frameworks.

IFRS S2 specifically requires disclosure of Scope 1, Scope 2, and (for most entities) Scope 3 emissions using GHG Protocol methodology, scenario analysis aligned with a 1.5°C pathway, and financed emissions disclosure for financial institutions.