What are IFRS S1 and IFRS S2?
IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures) are the first two standards issued by the ISSB in June 2023. They establish the baseline for sustainability disclosures aligned with capital-markets needs. Both apply to annual reporting periods beginning on or after 1 January 2024.
IFRS S1 — General Requirements
- Governance: how the entity oversees sustainability-related risks and opportunities.
- Strategy: business model and value chain effects, anticipated financial effects.
- Risk management: processes for identifying, assessing, prioritising and monitoring.
- Metrics and targets: disclosure of performance metrics.
- Connectivity: sustainability disclosures must be linked to financial statements (consistent assumptions, time horizons).
IFRS S2 — Climate Disclosures
- Physical and transition risks: identification and impacts on strategy and financials.
- GHG emissions: Scope 1, 2 and material Scope 3.
- Climate-related opportunities.
- Industry-specific metrics: based on SASB Standards for the entity’s industry.
- Climate resilience: scenario analysis disclosure.
Adoption path and Turkish relevance
IFRS S1/S2 became operative through jurisdictional adoption, and Türkiye moved early: KGK’s Türkiye Sustainability Reporting Standards (TSRS 1 and TSRS 2) mirror the ISSB baseline and apply mandatorily to companies above defined thresholds, with assurance expectations phasing in. The practical consequences run beyond listed companies — banks and large corporates push climate-data requests down their supply chains, so scale-ups encounter S2-shaped questionnaires in commercial diligence years before any direct reporting duty. The legal risk concentrates in consistency: sustainability statements in TSRS reports, investor decks and marketing must tell one story, because greenwashing enforcement and reps-and-warranties exposure both feed on the gaps between them.