What is IFRS S1?
IFRS S1 is the International Sustainability Standards Board's general standard for investor-focused sustainability disclosure. It covers risks and opportunities reasonably expected to affect cash flows, access to finance, or cost of capital. Keslio's ISSB guide explains how S1 and climate-specific S2 fit together.
Why does IFRS S1 matter to you?
You meet it when local rules adopt IFRS S1, a parent includes your business in its reporting, or you apply it voluntarily. Malaysia's National Sustainability Reporting Framework phases IFRS S1 and S2 across listed and large non-listed companies.
How does IFRS S1 work?
Paragraphs 17-18 require information if leaving it out, misstating it, or hiding it could influence an investor's or lender's decision. Paragraphs 20-24 require the sustainability disclosures to cover the same company or group as the financial statements and show connections across risks, decisions, figures, and financial effects. Use consistent data and assumptions where possible, and use the financial statements' presentation currency.
Start by listing sustainability-related risks and opportunities for the same company or group as the financial statements. For each item, record how it could affect cash flows, access to finance or cost of capital, who owns the evidence, and whether leaving it out could influence an investor or lender. Then compare the figures and assumptions with the financial statements before drafting.
Hypothetical example: A manufacturer identifies flood exposure at a plant included in its financial statements. Its sustainability analysis assumes the plant closes during a severe flood, while its financial forecast assumes continuous production. The team compares the assumptions, aligns them or explains the difference, and decides that leaving the risk out could influence a lender. It therefore discloses the risk, its response, the assumptions and the financial effects.
What mistakes should you avoid?
- Treating the standard's 1 January 2024 effective date as a worldwide reporting mandate.
- Using one cost assumption in sustainability analysis and another in the financial forecast without explaining the difference.
- Claiming compliance after completing only selected requirements.
Is IFRS S1 mandatory everywhere?
No. The IFRS Foundation issues it, while each jurisdiction decides whether to require or permit it and which companies are covered.
How is IFRS S1 different from IFRS S2?
S1 provides the general disclosure rules. S2 covers climate-related risks and opportunities and is applied with S1.