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The International Sustainability Standards Board (ISSB) has released an Exposure Draft proposing a series of changes in its key climate disclosure standard (IFRS S2), offering relief to greenhouse emissions for the financial sector. The amendments to IFRS S2 are made in response to the market feedback, and they address the specific application challenges in the implementation of ISSB standards.
For private market firms, asset managers, and impact investors, excluding certain emissions, such as those linked to derivatives, facilitated transactions, and insurance activities, their Scope 3 disclosures may reduce their compliance burden and reporting complexity.
Let’s explore the Exposure Draft released by ISSB in detail.
The ISSB's Exposure Draft proposes targeted amendments to IFRS S2 Climate-related Disclosures. It aims to provide additional relief and clarify requirements related to reporting greenhouse gas emissions. The draft focuses on Scope 3 Category 15 emissions, especially those linked to derivatives, investment banking, and insurance underwriting.
It also gives companies more flexibility if their local rules require different ways of measuring emissions or using different industry classifications.
Addressing the release of this draft, Sue Lloyd, ISSB Vice-Chair, said -
“Proposing these amendments to a relatively new Standard is not a decision that was taken lightly—we have carefully considered the need for such amendments and have sought to balance the needs of investors while considering cost-effectiveness for preparers.”
The proposed amendments relate to the application of GHG emissions in IFRS S2. This includes:
Following the collection and analysis of stakeholder input on the Exposure Draft, the ISSB will proceed with final changes as part of its open and thorough standard-setting process. The Exposure Draft will be open for comment for 60 days, with the comment period closing on June 27, 2025.
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