ISSB TIG to Clarify Scope 3 Categories and Intercompany GHG Reporting

The Transition Implementation Group on IFRS S1 and IFRS S2 convened in November 2025 to resolve stakeholder questions on Scope 3 categories and intercompany emissions reporting. The guidance clarifies how Indian companies adopting IFRS-aligned standards must treat group-level emissions and value-chain measurement.

The Transition Implementation Group on IFRS S1 and IFRS S2 convened in November 2025 to resolve application questions submitted by stakeholders to ISSB staff. Staff analysis determined the GHG Protocol Value Chain Standard's fifteen Scope 3 categories are non-exhaustive, requiring reporting entities to disclose all other material climate-related risks and opportunities. A second discussion addressed measuring emissions from intercompany transactions, using the scenario of a wholly-owned subsidiary selling widgets to its parent. Final decisions will be reported in the ISSB Update.

Large group entities and corporate preparers reporting under IFRS S2 are directly affected. IFRS S1 requires the reporting entity to be treated as a single economic unit, with group disclosures mirroring consolidated financial statements prepared under GAAP. Intercompany transactions are eliminated at group level, so emissions related to those eliminated transactions should not be reflected in the group's total measure. Only genuine emissions incurred by the group as a single economic unit are to be counted.

Preparers should consider their entire value chain for all material climate risks, even where specific emissions fall outside the fifteen Scope 3 categories. Group entities should align GHG measurement with consolidation principles, eliminating intercompany transactions to avoid double counting. Companies should monitor the official ISSB Update for the TIG's final technical decisions on these implementation questions to apply consistent, transparent treatment in group sustainability disclosures under the new global standards.

Key figure — Scope 3 categories: the GHG Protocol's fifteen value-chain categories were confirmed as non-exhaustive