The IFRS Foundation has released a new guidance document to support companies in disclosing information about their climate-related transition, including transition plans, in line with the requirements of IFRS S2 Climate-related Disclosures. The publication marks a continued effort to aid implementation of the ISSB’s global sustainability reporting standards.
The guidance builds upon materials developed by the UK’s Transition Plan Taskforce (TPT), whose work the IFRS Foundation assumed responsibility for in 2024. It aims to help companies deliver high-quality, consistent, and decision-useful disclosures related to their climate transition strategies—covering both mitigation and adaptation.
Sue Lloyd, Vice-Chair of the International Sustainability Standards Board (ISSB), said: “This guidance document addresses the fragmentation of disclosures about transition plans—which is costly for both preparers and investors—and provides inspiration for entities applying IFRS S2. It helps them determine what information is relevant to disclose regarding their climate transition strategy and goals.”
Drawing on feedback from multiple stakeholder roundtables earlier this year, the guidance adapts the TPT’s work for global applicability, while maintaining alignment with the ISSB’s global baseline and its focus on climate-related risks and opportunities.
While IFRS S2 does not mandate the presence of a transition plan, it requires entities to disclose material information related to climate risks and opportunities that could impact their future prospects. The new document clarifies that an entity’s climate-related transition encompasses the strategic actions, targets, and resource allocations made to respond to these risks.
Key elements of the guidance include:
- Clarification of the information entities should disclose if they have a transition strategy aimed at a lower-carbon and/or climate-resilient future.
- Guidance on presenting transition-related disclosures that align with IFRS S2.
- Recommendations for jurisdictions to build upon the baseline with additional requirements tailored to local needs—so long as core financial disclosures remain distinct.
For example, national regulators may require entities to report how their emissions targets align with the global ambition of limiting temperature rise to 1.5°C.
Importantly, the guidance does not alter IFRS S2’s existing requirements. The IFRS Foundation will continue monitoring application trends and consider future enhancements through its standard due process.
The document is expected to be a valuable resource for both reporting entities and jurisdictions integrating the ISSB Standards into their regulatory frameworks.
