Sustainability disclosure is the reporting of a company’s sustainability-related risks, opportunities, impacts, and metrics, increasingly as part of its regulated annual reporting under frameworks such as the ISSB’s IFRS S1 and S2 and the EU’s ESRS.
From voluntary reports to regulated disclosure
For years, companies reported on ESG voluntarily in sustainability reports using frameworks such as GRI, SASB, TCFD, and CDP. That is changing. The International Sustainability Standards Board (ISSB), set up by the IFRS Foundation, issued IFRS S1 (general requirements) and IFRS S2 (climate-related disclosures) in June 2023. Jurisdictions are now building them into law. According to S&P Global, 35 jurisdictions had adopted ISSB Standards on a voluntary or mandatory basis as of July 2026, with more planning to.
In the EU, the CSRD and ESRS do the same job with a broader, double-materiality scope.
What IFRS S2 requires
IFRS S2 builds on the four TCFD pillars:
| Pillar | What to disclose |
|---|---|
| Governance | How the board and management oversee climate-related risks and opportunities |
| Strategy | Risks and opportunities, effects on the business model and financial position, transition plans, and climate resilience assessed with scenario analysis |
| Risk management | Processes to identify, assess, and manage climate-related risks |
| Metrics and targets | Scope 1, 2, and 3 GHG emissions, industry-based metrics, and progress against targets |
GHG emissions are measured under the GHG Protocol Corporate Standard unless a jurisdiction requires another method. Scope 2 is reported location-based, with information on contractual instruments. Scope 3 is required after first-year relief. For details, see IFRS S2 GHG emissions disclosure requirements.
Why it matters now
- Legal liability. Disclosures in annual reports carry the same expectations as financial information.
- Assurance. Reported emissions increasingly need third-party assurance. See GHG verification.
- Group scope. Emissions follow the financial reporting entity, so data is needed from every subsidiary.
- Supply chain. Large reporters need Scope 3 data from their suppliers.
How companies respond
- Identify which rules apply to each entity and from which year.
- Build the GHG inventory on a group basis first, because it feeds every framework.
- Put review and approval controls over sustainability data, similar to those over financial data.
- Keep one dataset and map it to each framework rather than rebuilding reports separately.
Aentscope keeps group emissions data in one place and maps it to IFRS S2 and ESRS E1 disclosure requirements.
Related regulations and standards
| Type | Name | Relevance |
|---|---|---|
| Disclosure standard | IFRS S1 General Requirements | General sustainability disclosure |
| Disclosure standard | IFRS S2 Climate-related Disclosures | Climate disclosure and GHG emissions |
| EU regulation | CSRD and ESRS | EU sustainability reporting |
| Framework | TCFD recommendations | Basis of the IFRS S2 structure |