ISSB finalises IFRS S2 amendments easing Scope 3 financed-emissions disclosure

The International Sustainability Standards Board finalised targeted amendments to IFRS S2 permitting entities to limit Scope 3 Category 15 disclosure to financed emissions and use alternative classification systems beyond GICS. Indian financial institutions and preparers aligning with the ISSB baseline gain reduced reporting burdens, with the amendments effective for periods beginning on or after January 1 2027 and early application encouraged.

The ISSB finalised targeted amendments to greenhouse-gas emissions disclosure requirements within IFRS S2 Climate-related Disclosures. The amendments clarify that an entity may limit measurement and disclosure of Scope 3 Category 15 emissions to those qualifying as financed emissions, permit alternative classification systems beyond the Global Industry Classification Standard (GICS), and provide two jurisdictional reliefs concerning the GHG Protocol Standard and IPCC global warming potential values. The amendments and consequential changes to three SASB Standards become effective for reporting periods beginning on or after January 1 2027, with early application permitted and encouraged.

The amendments primarily affect financial institutions—banks, asset managers, and insurance companies—reporting Scope 3 Category 15 financed emissions, along with preparers in jurisdictions with conflicting local rules. The relief to limit Category 15 disclosure to financed emissions streamlines reporting for these institutions, while alternative classification systems accommodate jurisdictions using frameworks other than GICS. Jurisdictional reliefs address preparers already required by local law to use a different measurement method for part of their entity, and regions mandating older, jurisdictionally approved global warming potential values, preventing compliance conflicts.

Financial institutions and preparers should assess how the Scope 3 Category 15 relief reduces their initial reporting burden and consider early application ahead of the January 1 2027 effective date. Entities in jurisdictions progressing toward adoption should integrate the reliefs to ensure a smooth rollout, and review whether alternative classification systems or jurisdictional reliefs on GHG measurement and global warming potential values apply to their circumstances. Investors and regulators should monitor improved consistency and reliability of climate-related financial disclosures resulting from the amendments.

Key figure — Effective date: reporting periods beginning on or after January 1 2027