Last updated: May 13, 2026.
The International Sustainability Standards Board, or ISSB, created the first IFRS Sustainability Disclosure Standards: IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures. The standards were issued in June 2023 and became effective for annual reporting periods beginning on or after January 1, 2024.
The ISSB standards are designed as a global baseline for investor-focused sustainability disclosure. They help companies explain sustainability-related risks and opportunities that could reasonably be expected to affect the company's prospects, including cash flows, access to finance, cost of capital, strategy, and business model.
This guide explains what IFRS S1 and IFRS S2 require, how ISSB connects to TCFD, SASB, GRI, and ESRS, and what companies should prepare before starting an ISSB-aligned reporting project. Keslio can support reporting and communications, GHG emissions calculations, and sustainability strategy.
Short answer: The ISSB standards are investor-focused sustainability disclosure standards issued by the IFRS Foundation. IFRS S1 sets general requirements for disclosing material sustainability-related financial information. IFRS S2 focuses on climate-related disclosures. Companies applying IFRS S1 and IFRS S2 will meet the TCFD recommendations because the TCFD recommendations are fully incorporated into the ISSB standards.
What the ISSB is for
The ISSB was created to improve the consistency, comparability, and usefulness of sustainability-related financial disclosure for capital markets. Many companies already reported sustainability information before ISSB, but the information was often hard for investors and lenders to compare.
ISSB focuses on sustainability-related risks and opportunities that could affect enterprise prospects. That makes it different from frameworks that focus primarily on the company's impacts on people, the environment, and the economy. In practice, companies may need both lenses: investor-focused financial materiality for ISSB and impact or double materiality for other reporting requirements.
The ISSB standards do not automatically apply to every company in every jurisdiction. Adoption or other use depends on local regulation, stock exchange rules, parent-company requirements, lender requests, investor expectations, or voluntary reporting decisions.
IFRS S1: general sustainability-related financial disclosures
IFRS S1 is the general standard. It asks companies to disclose material information about sustainability-related risks and opportunities that could reasonably be expected to affect the company's prospects over the short, medium, or long term.
The disclosure is organized around four content areas:
- Governance: the governance processes, controls, and procedures used to monitor, manage, and oversee sustainability-related risks and opportunities.
- Strategy: the company's strategy for managing sustainability-related risks and opportunities.
- Risk management: the processes used to identify, assess, prioritize, and monitor sustainability-related risks and opportunities.
- Metrics and targets: the company's performance in relation to sustainability-related risks and opportunities, including progress toward targets where applicable.
This structure will feel familiar to companies that have worked with TCFD. The difference is that IFRS S1 applies to sustainability-related risks and opportunities beyond climate where those matters are material to investor decision-making.
IFRS S2: climate-related disclosures
IFRS S2 focuses on climate-related risks and opportunities. It builds on the TCFD architecture and asks companies to disclose information that helps users understand the company's exposure to climate-related physical risks, transition risks, and climate-related opportunities.
Common IFRS S2 readiness areas include:
- Climate governance and management oversight.
- Climate-related risks and opportunities over short, medium, and long-term horizons.
- Effects on business model, strategy, value chain, and financial planning.
- Climate resilience and scenario analysis approach.
- Risk management processes and integration into overall risk management.
- Scope 1, Scope 2, and Scope 3 greenhouse gas emissions, subject to applicable reliefs and local requirements.
- Climate-related targets, transition plans, capital deployment, and progress.
- Industry-based metrics where relevant.
For more detail on the TCFD connection, see Keslio's practical guide to TCFD recommendations and ISSB climate disclosures. For the emissions foundation, see GHG emissions calculations.
ISSB, TCFD, and SASB
The ISSB standards build on existing investor-focused reporting architecture. The IFRS Foundation states that companies applying IFRS S1 and IFRS S2 will meet the TCFD recommendations because TCFD is fully incorporated into the ISSB standards.
SASB also remains important. IFRS S1 requires companies to refer to and consider the applicability of SASB Standards when identifying sustainability-related risks and opportunities and related disclosures in the absence of a specific IFRS Sustainability Disclosure Standard.
For companies, this means an ISSB readiness project should not only read IFRS S1 and IFRS S2 in isolation. It should also consider the company's industry, investor expectations, climate exposure, and whether SASB metrics point to useful sector-specific disclosures.
ISSB, GRI, and ESRS
ISSB is not the same as GRI or ESRS.
- ISSB: focuses on sustainability-related financial information useful to investors and capital markets.
- GRI: focuses on the organization's impacts on the economy, environment, and people.
- ESRS: applies under the EU CSRD and uses double materiality, covering both impact materiality and financial materiality.
Companies may need to report under more than one framework. A multinational group, for example, may use ISSB-aligned disclosures for investors, ESRS for EU reporting, GRI for broader impact reporting, and customer-specific disclosures for procurement portals.
For related guides, see Keslio's practical guide to the GRI Standards, guide to ESRS, and materiality assessment guide.
Materiality under ISSB
ISSB uses an investor-oriented materiality lens. Information is material if omitting, misstating, or obscuring it could reasonably be expected to influence decisions of users of general purpose financial reports.
This does not mean companies should ignore impacts. Some impacts become financially material because they affect revenue, costs, cash flows, assets, liabilities, access to finance, reputation, customer contracts, insurance, or regulatory exposure. The practical task is to connect sustainability matters to enterprise prospects using evidence.
For example, supplier emissions may be financially relevant if major customers require emissions data for contract renewal. Water stress may be financially relevant if a manufacturing site depends on water availability. Workforce health and safety may be financially relevant if incidents affect operations, insurance, legal exposure, or customer trust.
How to prepare for ISSB reporting
An ISSB readiness project should be treated as a reporting and data-control project, not only a writing exercise.
1. Confirm the reporting driver
First, identify why the company is looking at ISSB. Is it required by a jurisdiction, requested by an investor or lender, expected by a parent company, or being used voluntarily as a reporting baseline?
The answer affects scope, timing, governance, assurance expectations, and whether local modifications or reliefs apply.
2. Map sustainability-related risks and opportunities
Identify the sustainability-related risks and opportunities that could affect enterprise prospects. Start with climate because IFRS S2 is the first topic-specific standard, but do not stop there if other topics are financially material.
Potential topics include climate risk, energy, water, human capital, supply chain resilience, data privacy, product quality, responsible sourcing, biodiversity, regulatory change, and customer sustainability requirements.
3. Assign governance and data owners
ISSB reporting touches finance, risk, legal, operations, procurement, HR, sustainability, investor relations, and communications. Each required disclosure should have an owner, source data, evidence, and review route.
4. Build the climate data foundation
For IFRS S2, companies need climate-related information, including greenhouse gas emissions. A practical first step is a Scope 1 and Scope 2 inventory plus a Scope 3 screening, with clear documentation of boundaries, emission factors, assumptions, and gaps.
Keslio's guide to building a strong climate strategy explains how this connects to transition planning and reporting.
5. Create an evidence pack
Keep records behind disclosures: board minutes, risk assessments, emissions calculations, scenario analysis assumptions, supplier data, targets, policies, management review notes, and methodology decisions. This makes reporting more consistent and easier to update annually.
6. Draft disclosure in investor language
ISSB disclosure should explain what the matter means for the business, not only why it is environmentally or socially important. Link sustainability matters to strategy, risk, cash flows, access to finance, cost exposure, customer relationships, and operational resilience where relevant.
Common mistakes
- Treating ISSB as generic ESG reporting: ISSB is focused on sustainability-related financial information for capital markets.
- Ignoring jurisdictional adoption: ISSB standards are a global baseline, but local requirements determine how and when they apply.
- Starting with the report before the data: disclosures need source data, assumptions, controls, and owners.
- Confusing ISSB with GRI or ESRS: the materiality lens and reporting objective differ.
- Underestimating Scope 3: IFRS S2 can require value-chain emissions information, subject to applicable reliefs and rules.
- Missing the TCFD bridge: companies with TCFD work can use it as a starting point, but should check the full IFRS S1 and S2 requirements.
- No connection to financial planning: investor-focused disclosure should connect sustainability matters to business strategy and financial relevance.
What companies should prepare
Before starting an ISSB-aligned report, gather:
- Reporting entity and reporting-period information.
- Board and management governance records.
- Risk registers and sustainability-related risk assessments.
- Climate risk analysis, physical and transition risk information, and scenario analysis where available.
- Scope 1, Scope 2, and relevant Scope 3 emissions data.
- Targets, transition plans, and progress records.
- Industry-specific metrics or SASB-related indicators where relevant.
- Investor, lender, parent-company, customer, or regulator requests.
- Existing GRI, ESRS, TCFD, CDP, or sustainability report content.
- Evidence for assumptions, exclusions, boundaries, and methodology choices.
How Keslio can help
Keslio helps companies turn sustainability reporting frameworks into practical data and disclosure workplans. For ISSB-related work, this can include:
- Reviewing whether ISSB, TCFD, ESRS, GRI, or customer reporting is the right reporting route.
- Mapping sustainability-related risks and opportunities to governance, strategy, risk management, metrics, and targets.
- Calculating Scope 1, Scope 2, and relevant Scope 3 emissions.
- Preparing data request checklists and evidence packs.
- Drafting climate and sustainability-related disclosure sections.
- Connecting ISSB-aligned reporting to climate strategy, transition planning, and investor communication.
If you need to prepare for ISSB-aligned sustainability disclosure, Keslio's reporting and communications and GHG emissions calculations services can help turn the standards into a manageable first reporting process.
