What is IFRS ?
The IFRS Foundation is a not-for-profit corporation founded on the principle that better information leads to better decisions.
IFRS Standards enable companies worldwide to provide reliable, transparent and globally comparable information to their investors, so that they can make better investment decisions.
Mission: develop high-quality IFRS Standards that bring transparency, accountability and efficiency to capital markets around the world.
IFRS Accounting
Since its creation in 2001, the IFRS Foundation has transformed the global landscape of financial information by introducing IFRS Accounting Standards developed by the International Accounting Standards Board (IASB).
The Standards have in effect become the global language of financial statements—trusted by investors worldwide and required for use by more than 140 jurisdictions.
IFRS Sustainability
Responding to the need for consistent and comparable sustainability information to inform economic and investment decisions, in 2021 the IFRS Foundation created the International Sustainability Standards Board (ISSB) which operates alongside the IASB.
The ISSB develops IFRS Sustainability Disclosure Standards, designed to deliver a truly global baseline of sustainability disclosures to inform capital markets.
What are the requirements ?
The IFRS standard that focuses on sustainability is the IFRS S2.
The official IFRS S2 standard can be found on the official website here
IFRS S2 becomes effective for annual reporting periods starting on or after January 1, 2024, with earlier application allowed if IFRS S1 is also applied.
Its objective is to ensure entities disclose climate-related risks and opportunities useful for users of general-purpose financial reports.
Entities must disclose climate-related risks and opportunities affecting cash flows, access to finance, or cost of capital over the short, medium, or long term.
IFRS S2 applies to:
Climate-related physical risks
Climate-related transition risks
Climate-related opportunities
Entities must disclose:
Governance processes for monitoring and managing climate-related risks and opportunities.
Strategies for managing these risks and opportunities.
Risk and opportunities: Processes for identifying, assessing, prioritizing, and monitoring climate-related risks and opportunities.
Metrics and targets: Performance in relation to climate-related risks and opportunities, including progress towards climate targets.
Detailed requirements about Metrics and targets
Companies shall disclose:
greenhouse gases information:
Scope 1 GHG emissions
Scope 2 GHG emissions
Scope 3 GHG emissions
the approach it uses to measure its greenhouse gas emissions
for Scope 1 and Scope 2 GHG emissions disclosed, disaggregate emissions between the consolidated accounting group and other investees (associates, joint ventures and unconsolidated subsidiaries)
location-based Scope 2 GHG emissions
information about any contractual instruments
for Scope 3: which categories are included + additional information about Category 15 (investments)
climate-related transition risks—the amount and percentage of assets or business activities vulnerable to climate-related transition risks
climate-related physical risks—the amount and percentage of assets or business activities vulnerable to climate-related physical risk
climate-related opportunities—the amount and percentage of assets or business activities aligned with climate-related opportunities
capital deployment—the amount of capital expenditure, financing or investment deployed towards climate-related risks and opportunities
internal carbon prices
remuneration
a description of whether and how climate-related considerations are factored into executive remuneration
the percentage of executive management remuneration recognised in the current period that is linked to climate-related considerations
quantitative and qualitative climate-related targets it has set to monitor progress towards achieving its strategic goals, and any targets it is required to meet by law or regulation, including any greenhouse gas emissions targets
information about its approach to setting and reviewing each target, and how it monitors progress against each target
information about its performance against each climate-related target and an analysis of trends or changes in the entity’s performance
For each GHG emissions target:
which greenhouse gases are covered by the target
whether Scope 1, Scope 2 or Scope 3 GHG emissions are covered by the target
whether the target is a gross GHG emissions target or net GHG emissions target. If the entity discloses a net GHG emissions target, the entity is also required to separately disclose its associated gross GHGemissions target
whether the target was derived using a sectoral decarbonisation approach
the entity’s planned use of carbon credits to offset greenhouse gas emissions to achieve any net greenhouse gas emissions target