About IFRS S2

IFRS S2 is the international standard issued by the International Sustainability Standards Board (ISSB) for reporting climate change risks and opportunities. It is part of a wider sustainability framework that aims to bring rigour and clarity to the way companies reflect climate impacts in their business decisions.

The aim of the standard is to make relevant, comparable and useful climate information for investors and other economic actors. It sets out clear requirements for firms to explain how climate influences their strategy, performance and future prospects.

An IFRS guide to transition plans

Within this framework, the guide on transition plans helps organisations to understand how to coherently express their intentions, actions and progress in adapting to the low-carbon economy. It is practical guidance that translates the provisions of the standard into concrete communication steps, especially for organisations that are developing or already have a climate transition plan.

Central to the guidance is the clear distinction between companies that have a formal plan and those that are still formulating their direction. The fact that a firm does not have a formal plan does not exclude it from reporting obligations. The guidelines require an honest account of how the organisation is responding to climate risks: what actions are underway, how they are integrated into the overall strategy, and what resources are involved in these efforts. What is important is that this approach reflects a clear understanding of the climate context and a responsible response, even if some formal elements are missing.

Integrating the transition plan into the overall reporting structure

For companies that have adopted a transition plan, the level of detail required is higher. They should explain what the objectives are, what assumptions the plan is based on, what external conditions are likely to influence its success, and what the time horizon is. It should also describe how resources are allocated - financial, technological, human - and how the company monitors and evaluates progress over time.

In addition to this information, the guidance emphasises the integration of the transition plan into the overall reporting structure under the four pillars of IFRS S2: governance, strategy, risk management and performance indicators. Thus, organisations are urged to show how the plan is overseen, how it influences strategic decisions, what methodologies are used to identify climate risks, and how targets are constructed to measure climate performance. For example, greenhouse gas emissions - direct, indirect and value chain - should be presented transparently, together with information on the targets set and the steps taken to achieve them.

Analysing climate resilience

Another important element of the guide relates to analysing climate resilience. Companies are encouraged to use different scenarios to test how their strategies would hold up under conditions of transition or global warming. The choice of scenarios is up to each organisation, but their justification and application should be well explained and relevant to the context in which they operate.

What this guide achieves is to provide a clear and applicable structure. The information required is precise and the way it is presented is grounded in organisational reality. This supports those building rigorous and relevant reporting without unnecessarily complicating the process. The document helps to better understand what a well-governed and well-communicated climate transition means.

Sustainability reporting, in the view of this guide, is part of a strategic approach that requires ownership, rigour and transparency. Companies that document their transition clearly and consistently are able to send a signal of confidence to investors, authorities and the public.

The IFRS S2 Guidance is a tool that encourages mature and grounded-in-reality reporting based on what organisations are actually doing to respond to climate challenges.