IFRS consults on amendments on IFRS S2 on climate-related disclosures

On 28 April 2025, the International Sustainability Standards Board ('ISSB') released an exposure draft of amendments to IFRS S2 (climate-related disclosures). This follows the ISSB's vote to amend the IFRS S2 in January 2025 (see our blog post here).

The proposed amendments are technical in nature and aim to provide additional relief and clarity on specific GHG emissions disclosure requirements.

In summary, the proposed amendments look to:

1. permit entities to exclude Scope 3 Category 15 GHG emissions associated with derivatives, facilitated emissions (relating to investment banking) and insurance-associated emissions.
   
   Note that if adopted, entities will still be required to report on Scope 3 Category 15 financed emissions i.e. GHG emissions attributed to loans and investments, and assets under management (where relevant);
    
2. allow (in certain circumstances) entities to use industry-classification systems other than the Global Industry Classification Standard (GICS) for disaggregating absolute gross financed emissions by industry.
    
3. provide jurisdictional relief to entities required by a jurisdictional authority or exchange on which it is listed to use specific methods for measuring GHG emissions and global warming potential (GWPs), to use such methods.  

Status of countries that have already adopted the IFRS S2 standard

Although the exposure draft is silent on the impact of the proposed amendments to countries that have already adopted the ISSB standards (e.g. Australia), the IFRS website indicates that jurisdictions with their own Standards, which are ‘based on’ the ISSB Standards, will be encouraged to maintain consistency to simplify global reporting for companies and ensure the global baseline is maintained.

Status in the UK

The incorporation of the ISSB Standards into UK sustainability reporting is ongoing. At present, the UK Government is completing its endorsement decision. The FCA will subsequently consult on the introduction of the requirements for UK listed companies (with the FCA's consultation expected to launch in Q3 2025).

As part of the Government's endorsement decision, technical assessment was delegated to the UK Sustainability Disclosure Technical Advisory Committee ("TAC") which issued its technical assessment in December 2024.

Subject to a few limited exceptions (including suggesting allowing deviations from the GICS, similar to ISSB's own proposed amendment), TAC recommended endorsing the standards without amendment.

It is unclear whether the current amendments will be incorporated into the UK regime, but given their technical nature, it is expected that these will not be controversial.

Consultation timeline and next steps

The Exposure Draft will be open for comment for 60 days with the comment period closing on 27 June 2025. The ISSB aims to finalise these amendments by the end of 2025, subject to stakeholder feedback.