Before 2023, a company wanting to report on sustainability chose from an uncomfortable number of overlapping frameworks: TCFD, SASB, CDSB, the Integrated Reporting framework, GRI, and a long tail of sector schemes. Investors complained, reasonably, that comparing two companies was nearly impossible.
The IFRS Foundation — the body behind the accounting standards most of the world uses — created the International Sustainability Standards Board to consolidate that landscape. In June 2023 the ISSB issued its first two standards: IFRS S1 and IFRS S2. They absorbed the TCFD recommendations and the SASB standards, and TCFD itself was disbanded shortly afterwards with monitoring responsibility transferred to the IFRS Foundation.
This is why Nigeria’s route was adoption rather than authorship. The whole value of the standards is that they are the same everywhere; a national variant would have thrown away the comparability that justifies them.
| IFRS S1 | IFRS S2 | |
|---|---|---|
| Subject | All sustainability-related risks and opportunities that could reasonably be expected to affect your prospects | Climate-related risks and opportunities specifically |
| Role | Sets the general requirements — how to report, what counts as material, where the information sits | Sets the topic-specific requirements, including greenhouse gas emissions |
| Notable requirement | Connected information: sustainability data must connect to the financial statements rather than sit apart from them | Scope 1, 2 and 3 emissions measured to the GHG Protocol, plus climate resilience assessment |
| First-year relief | May be deferred so year one reports climate only | Scope 3 may be deferred to year two |
The ISSB standards use financial materiality. Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that primary users of general purpose financial reports — existing and potential investors, lenders and other creditors — make on the basis of those reports.
That is a narrower test than the one GRI applies, and narrower than the double materiality used in the European CSRD. It does not ask whether your operations affect the world; it asks whether a sustainability matter could affect your cash flows, your access to finance or your cost of capital.
In practice the difference is smaller than it sounds, because over any reasonable time horizon the two converge: a company causing serious environmental harm is a company facing regulatory, litigation and licence risk. But when you are deciding whether a particular disclosure is required, the ISSB test is the one to apply — and applying the wrong test produces a report that is either bloated or incomplete.
The climate resilience requirement in S2 is where first-time reporters most often over-engineer. The standard asks for an approach commensurate with your circumstances.
No. IFRS S2 provides relief from disclosing Scope 3 in the first annual reporting period. That is a year to identify which of the fifteen categories are material and start collecting, not a year to ignore it — supplier data has long lead times and year two arrives quickly.
The standard requires disclosure of the GWP values used and their source. Most reporters use the values from the most recent IPCC assessment available at the reporting date. What matters for assurance is that you state which you used and apply them consistently.
Not necessarily — they answer different questions for different audiences. Many companies file to the ISSB standards and continue reporting against GRI for stakeholders interested in impact. The efficiency is in collecting once and mapping twice, which is a data architecture decision rather than a reporting one.
Less than you might expect about layout, and considerably more than you might expect about content. There is no mandated template, but there is a defined set of disclosures, and omitting one requires you to say so and why. The IFRS Foundation also publishes a digital taxonomy for tagging, which is where structured filing comes in.
A summary of a regulation is not the regulation. These are the primary documents this page is based on.
Four questions, and you get the year you first file, the framework, and what to collect first.
Plain-language explainers of the FRC and SEC rules, ISSB S1 & S2, and what each asks you to disclose.
What a consultant-led reporting cycle costs against an annual licence, in Naira.
