The IFRS Foundation has published new implementation guidance to help organisations disclose climate-related transition plans in line with its sustainability standard, IFRS S2.
The document, titled Disclosing information about an entity’s climate-related transition, is designed to support the delivery of high-quality, consistent, and globally relevant climate-related disclosures.
This latest release builds on earlier materials from the UK’s Transition Plan Taskforce (TPT), which the IFRS Foundation assumed responsibility for in 2024. It specifically aims to enhance how entities report on their climate transition strategies, including efforts in both mitigation and adaptation, under the ISSB Standards framework.
The guidance is not an amendment to the IFRS S2 standard, but rather a resource for those applying it. IFRS S2 itself does not require an entity to have a transition plan, but it does mandate that organisations disclose material information about sustainability-related risks and opportunities that could affect their business outlook. This includes information about how companies mitigate and adapt to climate-related physical and transition risks.
International Sustainability Standards Board (ISSB) vice-chair Sue Lloyd said, “This guidance document addresses the fragmentation of disclosures about transition plans—which is costly for both preparers of information and investors—and provides inspiration for entities who are applying IFRS S2 when making disclosures about their climate-related transition plans.”
The new guidance also seeks to resolve inconsistencies in transition plan disclosures by offering a globally applicable framework, tailored using feedback from industry roundtables. It offers clarity on the necessary disclosures, such as an organisation’s targets, strategy, and how it is deploying resources to support its shift to a lower-carbon and more climate-resilient economy.
Jurisdictions adopting or using ISSB Standards can choose to supplement IFRS S2 requirements with localised expectations, provided the core financial disclosures remain clearly identifiable. For example, authorities might require companies to detail how their greenhouse gas targets align with the 1.5°C pathway established in international climate agreements.
Looking ahead, the IFRS Foundation confirmed that the guidance does not alter IFRS S2 but may influence future updates. The Foundation will monitor the implementation of IFRS S2 and assess whether further enhancements to the standard are necessary, subject to its formal consultation process.
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