In May 2025, the International Sustainability Standards Board (ISSB) published educational material answering 13 common questions about the greenhouse gas (GHG) emissions requirements in IFRS S2 Climate-related Disclosures. It goes beyond a simple FAQ: it shows how the ISSB expects companies to define, measure, and disclose emissions. Here is a summary of the key points.
Update: In December 2025 the ISSB issued targeted amendments to IFRS S2’s GHG requirements. They let companies limit Scope 3 Category 15 disclosure to financed emissions, allow industry classification systems other than GICS, clarify the jurisdictional relief from using the GHG Protocol, and add a jurisdictional relief on GWP values. They apply to reporting periods beginning on or after 1 January 2027, with early application permitted.
1. Why does IFRS S2 require GHG emissions, including Scope 3?
IFRS S2 aims to give the primary users of general purpose financial reports information that is useful for decisions about providing resources to the company. Climate-related risks and opportunities arise across the whole value chain, through the company’s interactions with stakeholders, society, the economy, and the environment.
IFRS S2 therefore requires Scope 1, 2, and 3 emissions, subject to materiality. Together they show a company’s exposure to transition risk. Emissions can be classified and measured differently depending on the industry, the operating structure, and the organizational boundary approach, so disclosing all three scopes gives investors a fuller picture.
2. Which GHG Protocol standards does IFRS S2 reference, and why?
IFRS S2 refers to The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004) and the Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011). A common measurement basis improves comparability between companies and makes the information more useful to investors. Companies use these standards unless a jurisdictional authority or exchange requires a different method.
3. Do emissions have to be disclosed on a gross basis?
Yes. IFRS S2 requires gross emissions for the reporting period. That means emissions before any offsetting such as carbon credits, and in absolute terms rather than as an intensity.
4. Do we have to report all 15 Scope 3 categories?
No. But you must consider which categories are relevant to your activities, and whether emissions in each category provide material information about your exposure to transition risk. Where Scope 3 information is material, disclose it and explain which categories are included.
5. Can we limit Scope 3 to the GHG Protocol’s minimum boundary?
Not simply by default. ISSB Standards require companies to consider the entire value chain when providing information about sustainability-related risks and opportunities that could reasonably be expected to affect their prospects. The GHG Protocol’s minimum boundaries are a starting point, not a ceiling.
For example, Category 5 (waste generated in operations) has a minimum boundary covering the Scope 1 and 2 emissions of the waste management supplier during treatment. A company still needs to consider whether a wider boundary is relevant. In practice, define the extent and structure of your value chain using all reasonable and supportable information available without undue cost or effort, then judge whether each category’s emissions are material.
6. Do the IFRS S1 reporting entity and the GHG Protocol organizational boundary conflict?
They serve different purposes. Under IFRS S1, sustainability-related financial disclosures must cover the same reporting entity as the related financial statements. The organizational boundary under the GHG Protocol decides which operations’ emissions are included and how (equity share or control).
IFRS S2 reconciles the two by asking companies to disclose Scope 1 and 2 emissions separately for the consolidated accounting group and for other investees such as associates, joint ventures, and unconsolidated subsidiaries, and to explain the approach used.
7. What is the Scope 3 measurement framework?
The ISSB developed a Scope 3 measurement framework because most companies will rely on estimates. It helps companies prioritize inputs and assumptions, favoring:
- data based on direct measurement over estimates,
- primary data from the value chain over secondary data,
- timely data that reflects the actual period and activity,
- verified data over unverified data.
8. How does “reasonable and supportable information available without undue cost or effort” apply?
When choosing measurement approaches, inputs, and assumptions for Scope 3, IFRS S2 (paragraph B39) requires companies to use all reasonable and supportable information available at the reporting date without undue cost or effort. This proportionality mechanism works together with the measurement framework to decide what data to collect.
9. What if value-chain partners have different reporting periods?
IFRS S2 allows a company to use the most recent data available from value-chain entities without undue cost or effort, even if their reporting period differs, provided the length of the periods is the same and the company discloses the effects of significant events or changes between the periods.
10. How should a commercial bank measure Category 15 emissions for undrawn loan commitments?
IFRS S2 does not prescribe a specific method. It does require additional information about financed emissions, including the measurement approach, inputs, and assumptions used. The December 2025 amendments also clarify that companies may limit Category 15 measurement and disclosure to financed emissions.
11. Do we have to set a GHG reduction target?
No. But if you have set one, you must disclose information about it: the metric, the objective, the part of the business it covers, the period, the base period for measuring progress, milestones, and interim targets.
12. What do we disclose if we have a net-zero or net target?
If you have a net emissions target, you must also disclose the related gross target separately. If you plan to use carbon credits to meet a net target, disclose the extent of reliance on them, the third-party verification or certification schemes, the type of credits (nature-based or technological, removal or avoidance), and other factors needed to understand their credibility and integrity.
13. Do we restate prior-year emissions after an acquisition or disposal?
IFRS S2 does not require comparative emissions to be restated for changes in the reporting entity, such as acquiring or selling a subsidiary. IFRS S1 requires comparative information for all amounts disclosed, and that comparative information follows the composition of the reporting entity in the comparative-period financial statements.
What this means in practice
The educational material shows that emissions, targets, and carbon credits are now treated as decision-useful information about climate-related risks and opportunities, not as a technical side note. Companies need to move beyond “calculate and submit” toward an internal system covering data collection and quality control, value-chain collaboration, targets and pathways, and the use of credits. Scope 3, in particular, depends on how well you understand your value chain.
Aentscope helps companies manage group-level Scope 1, 2, and 3 emissions and targets at the level IFRS S2 expects, with evidence and change history behind every number. For definitions, see our glossary entries on Scope 3 and sustainability disclosure.