The International Sustainability Standards Board (ISSB) has issued final amendments to IFRS S2 Climate-Related Disclosures, introducing targeted reliefs and clarifications to support the effective implementation of greenhouse gas (GHG) emissions disclosure requirements. These amendments respond to market feedback and are designed to ease application challenges while maintaining the decision-usefulness of information for investors.
Background
In April 2025, the ISSB issued an Exposure Draft (ED) proposing targeted amendments to IFRS S2 for public consultation. After considering market feedback and deliberation, the ISSB published the final amendments on 11 December 2025. These amendments are effective for reporting periods beginning on or after 1 January 2027, with early application permitted.
Key amendments
They include:
- Clarification of Scope 3 Category 15 GHG emissions: Entities may limit measurement and disclosure of Scope 3 Category 15 GHG emissions to financed emissions as defined in IFRS S2.
- Flexibility in industry classification: Entities are permitted to use alternative industry classification systems, beyond the Global Industry Classification Standard (GICS), to disaggregate financed emissions information.
- Jurisdictional relief: The amendments clarify the availability of jurisdictional relief from using the GHG Protocol Standard, allowing parts of an entity to use different measurement methods if required by local regulations.
- Relief from using latest Intergovernmental Panel on Climate Change (IPCC) values: Entities are provided relief from the requirement to use global warming potential values from the latest IPCC Assessment Report for converting GHG emissions.
Read our impact analysis to learn more.
Stakeholder feedback and ISSB response
The HKICPA’s Sustainability Disclosure Standards Committee reviewed the final amendments and concluded that all substantive comments raised in the Institute’s recommendation on the ED have been addressed:
- Disclosure of derivatives and financial activities: The proposed requirement to disclose the amounts of derivatives and financial activities excluded from Category 15 GHG emissions has been replaced with a qualitative requirement to describe these activities and explain what is treated as a derivative.
- Industry classification systems: The final amendments replace the previously proposed hierarchy with a less prescriptive approach. Entities are not required to use the GICS on a group-wide basis simply because a small part of the group uses it. Instead, entities may select a single, commonly used industry classification system that best supports comparability and understanding of transition risks. Entities engaged in both commercial banking and insurance activities may use different systems for each activity.
- Jurisdictional relief clarification: The term “part” of an entity is clarified, allowing jurisdictional relief to be applied to subsidiaries, branches or specific assets.
- Transition requirements: Specific provisions are provided for entities regarding adjustments to comparative information if they previously applied IFRS S2 when first applying the final amendments.
The equivalent amendments to HKFRS S2 were issued in February 2026.
Implementation support activities
Implementation support will be integrated into ongoing HKFRS S1 and S2 capacity-building initiatives, including training, publications, the Implementation Platform, and the technical query system. The Institute will monitor the application of the amendments and update the support plan as needed to address stakeholders’ needs.
This article was contributed by Anthony Wong, Associate Director of the Institute’s Standard Setting Department.
