ISSB proposes IFRS S2 amendments easing Scope 3 disclosure

The ISSB published an Exposure Draft proposing targeted amendments to IFRS S2 Climate-related Disclosures, including Scope 3 relief for financial-sector firms, open for comment until June 27, 2025. The changes affect how Indian entities aligning with the ISSB global baseline approach climate disclosure.

The International Sustainability Standards Board published an Exposure Draft proposing targeted amendments to IFRS S2 Climate-related Disclosures, the first such proposal since the standard's June 2023 launch, open for public comment until June 27, 2025. Key changes affect Scope 3 Category 15 emissions related to investments, granting financial-sector companies relief from disclosing emissions tied to derivatives, facilitated emissions such as underwriting or advisory, and insurance-associated emissions. Firms could instead limit Scope 3 reporting to financed emissions while disclosing the magnitude of excluded activities, including notional derivative amounts.

Financial-sector companies engaged in commercial banking and insurance are most affected, gaining GICS relief on flexibility in classifying disaggregated financed emissions. Entities operating across multiple jurisdictions also benefit: they could use jurisdiction-required Global Warming Potential values instead of the latest IPCC metrics where local regulation mandates, and apply measurement methods other than the Greenhouse Gas Protocol if aligned with jurisdictional requirements. Over 35 jurisdictions have begun adopting or aligning with the ISSB framework since IFRS S1 and S2 were published in mid-2023.

Stakeholders should review and comment on the proposed amendments by June 27, 2025, with the ISSB planning to finalize them by the end of 2025. Entities currently reporting under IFRS S1 and S2 as issued in 2023 can continue without interruption. Jurisdictions adopting or aligning national standards with ISSB guidelines are encouraged to maintain consistency to uphold the global baseline envisioned by the IFRS Foundation. The amendments aim to reduce reporting duplication, lower compliance costs, and support adoption across multiple jurisdictions.

Key figure — Comment deadline: June 27, 2025 for the proposed IFRS S2 amendments