The IFRS Foundation’s International Sustainability Standards Board (ISSB) has announced a set of amendments to the greenhouse gas (GHG) disclosure requirements under its IFRS S2 climate reporting standard, with major changes designed to simplify and clarify how financial institutions report the climate impacts of their financing activities.
The ISSB stated that these updates address challenges identified as companies began implementing IFRS S2, following a consultation launched earlier this year. Established at COP26 in November 2021, the ISSB aims to create global sustainability disclosure standards that provide investors with decision-useful information on sustainability risks and opportunities. IFRS S1 and S2 were introduced in June 2023, and approximately 40 jurisdictions have begun steps to adopt the standards.
A notable amendment concerns disclosure of Scope 3 Category 15 emissions—those arising from value chain activities related to investments. The ISSB now clarifies that financial institutions may limit reporting to emissions linked to their own loans and investments, or for asset managers, to emissions tied to assets under management. This means facilitated emissions from investment banking activities and insurance-related emissions from underwriting are not required. The update also confirms that emissions attributable to derivatives can be excluded from Scope 3 financed emissions disclosures.
Additional revisions include relief for banks and insurers from having to rely solely on the Global Industry Classification Standard (GICS) when reporting disaggregated financed emissions, allowing the use of alternative classification systems. The ISSB also permits entities to use jurisdiction-mandated Global Warming Potential (GWP) values even if they differ from the latest IPCC assessment, and clarifies that companies may use a jurisdiction-approved measurement approach other than the Greenhouse Gas Protocol for calculating GHG emissions.
