---
title: "IFRS S2 explained: climate disclosure requirements and what they ask of insurers"
source_url: https://abgalis.com/regulation/ifrs-s2
canonical: https://abgalis.com/regulation/ifrs-s2
description: "IFRS S2 in full: issued June 2023, effective 2024, amended once in December 2025 with effect from 2027. Scenario analysis, the GHG Protocol, financed emissions for insurers, and why insurance-associated emissions are permitted to be limited rather than excluded."
publisher: Abgalis Limited
author: Abgalis Research
date_published: 2026-08-22
date_modified: 2026-08-22
keywords: ["IFRS S2", "ISSB", "climate-related disclosures", "IFRS S1", "Scope 3", "financed emissions", "GHG Protocol", "climate scenario analysis", "climate resilience", "TCFD", "UK SRS", "insurance"]
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citation: "Abgalis Research, 'IFRS S2 explained: climate disclosure requirements and what they ask of insurers', Abgalis Limited, https://abgalis.com/regulation/ifrs-s2"
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---

Regulation · IFRS S2

# IFRS S2 explained: climate disclosure requirements and what they ask of insurers

**IFRS S2 — *Climate-related Disclosures*** was issued by the International Sustainability
Standards Board on **26 June 2023**, alongside IFRS S1, and applies to annual reporting
periods beginning on or after **1 January 2024**.

It has been amended **once**. Getting both dates right matters more than it sounds, because
the amendments are issued but not yet effective, and the two are routinely conflated.

---

## When did IFRS S2 take effect, and has it changed since?

| | Date |
|---|---|
| **IFRS S2 issued** | 26 June 2023 |
| **Effective** (§C1) | annual reporting periods beginning on or after **1 January 2024** |
| **Amendments issued** | **11 December 2025** |
| **Amendments effective** (§C1A) | annual reporting periods beginning on or after **1 January 2027**, early application permitted |

The amending document is ***Amendments to Greenhouse Gas Emissions Disclosures (Amendments to
IFRS S2)***. It was preceded by an exposure draft in **April 2025** — which is the source of a
common dating error, since the exposure draft and the final amendments are eight months apart.
If a document tells you the GHG amendments were made in mid-2025, it is describing the
consultation.

**A second trap.** The IFRS Foundation publishes annual bound compilations, so IFRS S2 can be
surfaced under a 2026 label. That is the compilation year, not an issue date, and it does not
mean the December 2025 amendments are effective. For a financial year beginning 1 January
2026, the operative text is the 2023 text unless the entity chooses early application.

## What did the December 2025 amendments change?

Four reliefs, all narrowing the greenhouse gas disclosure burden rather than widening it.

- **New §29A** permits an entity to limit what it includes in Scope 3 Category 15 to **only
  its financed emissions**, and to exclude emissions attributable to derivatives.
- **New §§29B and 29C** attach conditions: explain what has been treated as a derivative and
  what is excluded; and where Category 15 is disclosed, give both the total and the
  financed-emissions subtotal.
- **New §§B62A and B63A** remove the hard requirement to use GICS. An entity selects an
  industry-classification system that gives useful information about transition risk,
  favouring commonly used systems, and discloses which it used. **B63A is the insurance one.**
- **Amended §29(a)(ii)** clarifies the jurisdictional relief from the GHG Protocol where an
  entity is required *in whole or in part* to use a different method. A related relief covers
  global warming potential values.

Issued the same day: ***Consequential Amendments to Align with Amendments to Greenhouse Gas
Emissions Disclosures***, which updates the SASB Standards and the IFRS S2 industry-based
guidance for asset management, commercial banking and **insurance**. Same effective date.

## What does IFRS S2 actually require?

The architecture deliberately mirrors TCFD's four pillars.

**Governance (§§5–6).** Which body oversees climate-related risks and opportunities, how that
is reflected in terms of reference, how it satisfies itself the right skills are available,
how often it is informed, and how it oversees targets. Then management's role.

**Strategy (§§9–23).** The risks and opportunities themselves, classified as physical or
transition; the time horizons used; effects on the business model and value chain; the effect
on strategy and decision-making, **including transition plans**; current and anticipated
financial effects; and **climate resilience (§22)**.

**Risk management (§§24–25).** How climate risks are identified, assessed, prioritised and
monitored — including the use of scenario analysis as an input — and how that is integrated
into overall risk management.

**Metrics and targets (§§27–37).** Cross-industry metrics, industry-based metrics, and targets.

### The scenario analysis requirement is proportionate, and that cuts against insurers

**§22** requires disclosure enabling users to understand the resilience of the strategy and
business model, and requires the entity to use **climate-related scenario analysis** using
*an approach commensurate with the entity's circumstances*.

The guidance at **§§B1–B18** makes the proportionality explicit: a qualitative, narrative
approach is acceptable for an entity building capability, while an entity with high exposure
and available resources is directed toward quantitative approaches.

**Read that as an insurer and it is not a relief.** Insurers and reinsurers are the archetype
of high exposure with modelling capability already in place. The proportionality provision
that protects a mid-size manufacturer offers a catastrophe underwriter very little.

### Emissions

Absolute gross emissions in tonnes of CO₂ equivalent, classified as Scope 1, 2 and 3,
**measured in accordance with the GHG Protocol Corporate Standard (2004)** unless a
jurisdictional authority or listing exchange requires otherwise. Scope 1 and 2 disaggregated
between the consolidated accounting group and other investees. Scope 2 disclosed on a
**location-based** basis, plus information on contractual instruments. For Scope 3, disclosure
of which categories are included.

### Transition reliefs

**§C3** — no comparative information required in the first annual reporting period.
**§C4** — in the first year an entity may continue using a non-GHG-Protocol measurement method
it used immediately before, and may **omit Scope 3 entirely, including financed emissions**.
**§C5** — the reliefs carry forward for presenting comparatives in the following period.
IFRS S1 separately permits reporting only climate in the first year.

## What does IFRS S2 require of insurers specifically?

**Financed emissions.** §29(a)(vi)(2) requires additional information about Category 15
emissions where an entity's activities include asset management, commercial banking or
**insurance**, with the detail set out at **§§B58–B63**. For an insurer that means absolute
gross financed emissions split by Scope 1, 2 and 3; **gross exposure by industry and by asset
class**; the percentage of gross exposure included in the calculation; and the methodology.
In the 2023 text the industry breakdown was tied to GICS; §B63A relaxed that.

**Industry-based metrics.** §32 requires disclosure of industry-based metrics, referring to
the IFRS S2 Industry-based Guidance, which includes a volume for insurance derived from the
SASB Insurance Standard. Its topics run to environmental risk exposure and the incorporation
of environmental risk into underwriting and capital adequacy.

> **A limit on what we will state here.** The current Insurance volume of the industry-based
> guidance sits behind an IFRS Foundation login and we have not read the final text. We are
> therefore not reproducing metric codes, because the provisional codes in the 2022 exposure
> draft were superseded — the financed-emissions metrics were renumbered to the FN-IN-410c
> series in the December 2025 consequential amendments. Any source still citing the exposure
> draft's FN-IN-1 to FN-IN-5 codes is quoting a superseded document.

**Insurance-associated emissions are not required.** The ISSB has twice declined to require
them, citing the absence of established methodologies. Its basis for conclusions distinguishes
financed emissions from facilitated emissions and from insurance-associated emissions
associated with underwriting. Financed emissions are defined by reference to loans and
investments — loans, project finance, bonds, equity investments and undrawn loan commitments.

**So an insurer's investment portfolio is in scope and its underwriting book is not.**
Underwriting-portfolio emissions are addressed by PCAF Part C, which is a separate, voluntary,
non-ISSB methodology. Any claim that IFRS S2 requires underwriting emissions is wrong, and it
appears in vendor material often enough to be worth checking.

## Is IFRS S2 mandatory, and where?

**IFRS S2 is not law anywhere until a jurisdiction adopts it.** The IFRS Foundation's
jurisdictional profiles, last updated 16 July 2026, record **25 finalised profiles** —
including Australia, Brazil, Hong Kong SAR, Japan, Malaysia, Nigeria, Singapore and Türkiye —
plus **13 jurisdictions whose approach is still in development**, among them Canada, China,
South Korea, Switzerland and the **United Kingdom**. The ISSB has separately reported more
than 40 jurisdictions adopting or taking steps. Those two figures count different things and
should not be added together.

**The UK did not adopt IFRS S2 directly.** It ran an endorsement process producing **UK SRS S1
and UK SRS S2**, issued 25 February 2026 and **voluntary**, with the effective dates
deliberately removed. Mandation rests on an FCA policy statement that has not been published.
We set that out in full on the [UK SRS page](/regulation/uk-srs/).

## Has IFRS S2 replaced TCFD?

**Carefully worded: the TCFD was disbanded, and its recommendations are fully incorporated
into IFRS S2 — but TCFD-derived regulation persists.**

The ISSB states that IFRS S1 and S2 fully incorporate the TCFD recommendations, and that a
company applying IFRS S2 meets them. The **TCFD itself disbanded in October 2023**, when the
Financial Stability Board declared its work complete and asked the IFRS Foundation to take
over monitoring of companies' disclosure progress from 2024.

That is not the same as supersession by legal instrument. In the UK the FCA's TCFD-aligned
listing rules **remain in force today**, and are only *proposed* to be replaced from January
2027. Our [TCFD and ISSB page](/regulation/tcfd-issb/) covers the transition between the two
frameworks in more detail.

## What is open at the ISSB?

| Workstream | Status |
|---|---|
| **Nature-related disclosures** | The ISSB agreed in April 2026 to proceed via an IFRS **Practice Statement** rather than a new standard or amendments to S1/S2, drawing on TNFD. Exposure draft targeted **October 2026** |
| **Enhancing the SASB Standards** | Exposure draft March 2026 covering agricultural products, meat/poultry/dairy and electric utilities. Comment period closed 24 July 2026. **Insurance is not in this tranche** |
| **Human capital** | Research stage. No date |
| **Taxonomy update for the GHG amendments** | Open for comment to **28 September 2026** |

---

## Where Abgalis fits

The two IFRS S2 requirements that are genuinely analytical rather than procedural are §22
climate resilience and the §§B58–B63 financed emissions work. Everything else is disclosure
plumbing that a reporting function can build.

§22 is where insurers cannot take the proportionate route, because the guidance escalates
expectations precisely for entities with high exposure and existing modelling capability.
And it asks for the same physical and transition risk analysis that the PRA already expects
to reach the ORSA under SS5/25 — which means the modelling can be done once and evidenced
twice, provided the two regimes are kept properly distinct in the documentation.

Abgalis carries all seven risk domains in one continuously updated model, so a transition or
physical driver can be traced through to underwriting, reserving, market and credit risk for
both purposes from the same run.

Accountability for every regulatory judgement remains with the firm. Abgalis is analytics,
not authority.

---

## Sources

All sources are primary.

- **IFRS S2** — [Climate-related Disclosures](https://www.ifrs.org/issued-standards/ifrs-sustainability-standards-navigator/ifrs-s2-climate-related-disclosures/), ISSB, issued 26 June 2023
- **ISSB issues inaugural standards** — [announcement](https://www.ifrs.org/news-and-events/news/2023/06/issb-issues-ifrs-s1-ifrs-s2/), 26 June 2023
- **Amendments to Greenhouse Gas Emissions Disclosures** — [announcement](https://www.ifrs.org/news-and-events/news/2025/12/issb-issues-targeted-amendments-ifrs-s2/), 11 December 2025
- **Completed project page** — [Amendments to GHG Emissions Disclosures](https://www.ifrs.org/projects/completed-projects/2025/amendments-to-disclosure-of-greenhouse-gas-emissions-s2/)
- **Exposure draft** — [ED/2025/1 announcement](https://www.ifrs.org/news-and-events/news/2025/04/issb-publishes-exposure-draft-targeted-amendments-s2/), April 2025
- **Jurisdictional adoption** — [Use by jurisdiction](https://www.ifrs.org/ifrs-sustainability-disclosure-standards-around-the-world/use-by-jurisdiction/), last updated 16 July 2026
- **TCFD and the ISSB** — [IFRS Foundation](https://www.ifrs.org/sustainability/tcfd/)
- **Nature-related disclosures** — [ISSB agrees proposed way forward](https://www.ifrs.org/news-and-events/news/2026/05/issb-agrees-proposed-way-forward-nature-related-disclosures/), 2026
- **Open for comment** — [IFRS documents open for comment](https://www.ifrs.org/projects/open-for-comment/)
- **UK SRS** — [the standards](https://www.gov.uk/government/publications/uk-sustainability-reporting-standards-uk-srs-s1-and-uk-srs-s2), Secretary of State for Business and Trade, 25 February 2026

*This page states the position as at 22 August 2026. Paragraph references are to IFRS S2 as
issued and as amended in December 2025. Where the industry-based guidance for insurance is
concerned, see the limitation noted in the text above.*

---

**Source:** [https://abgalis.com/regulation/ifrs-s2](https://abgalis.com/regulation/ifrs-s2) · Abgalis Research, published by Abgalis Limited (England and Wales, no. 17247499)

**Cite as:** Abgalis Research, *IFRS S2 explained: climate disclosure requirements and what they ask of insurers*, Abgalis Limited. https://abgalis.com/regulation/ifrs-s2