Understanding IFRS S1 and S2: Essential Developments in Sustainability Accounting
From sustainability reporting to carbon disclosure, gain a comprehensive understanding of IFRS S1 and S2 to improve corporate transparency and sustainability competitiveness.
What to decide after reading If you came for IFRS, SASB, TCFD, GRI, or ESG reporting requirements, the next step is to turn disclosure items into data collection, section assignments, and review workflows.
Table of Contents
- Global Trends in Financial Transparency and Sustainability Reporting
- Core Requirements of IFRS S1 and S2
- Responding to IFRS S1 and S2: Practical Strategies for Sustainability Professionals
- Corporate Response Measures
- Long-Term Impacts of IFRS S1 and S2
- The Critical Role and Future Opportunities of Sustainability Professionals
- Improve Reporting Transparency and Efficiency with Sustaihub's SaaS Services
Latest adjustments (September 23, 2026): The Financial Supervisory Commission (FSC) and Ministry of Environment announced a policy package adjusting Taiwan's sustainability disclosure adoption pathway, reducing the number of TWSE/TPEx-listed companies required to adopt IFRS Sustainability Disclosure Standards from approximately 1,970 to approximately 560. The threshold is now paid-in capital of NT$2 billion or more, or emission sources regulated by the Ministry of Environment that are required to conduct inventories and verification. Companies with paid-in capital below NT$2 billion that are not regulated—approximately 1,410 companies—are not required to adopt the standards but must still disclose basic climate information. Phase 3 companies need only disclose climate-related information during their first two financial years of adoption, with Scope 3 disclosure made voluntary. The Phase 1 and 2 timelines remain unchanged. These adjustments do not apply to financial, insurance, or securities and futures businesses. Actual requirements remain subject to regulations formally issued by the authorities. For the full overview, see IFRS Phase 3 Adjustments: Mandatory Adoption Reduced from 1,970 to Approximately 560 Companies.
Global Trends in Financial Transparency and Sustainability Reporting
As attention to sustainable development goals grows worldwide, IFRS S1 and S2 significantly enhance corporate reporting transparency, requiring companies to disclose comprehensive sustainability-related non-financial information alongside financial performance. Sustainability professionals play a key role in helping companies understand and implement the new requirements, improve report credibility and build competitive sustainable business models. These changes go beyond compliance: they communicate how companies manage ESG risks and opportunities and enhance long-term value.
Core Requirements of IFRS S1 and S2
IFRS S1 requires companies to disclose environmental, social and governance (ESG) risks and opportunities in their annual reports, explain their sustainability strategies, risk management measures and performance, and show the connections with financial outcomes.
IFRS S2 focuses on climate change, requiring disclosure of greenhouse gas emissions data, reduction targets and implementation steps. Together, the standards provide unified guidance to integrate sustainability strategies, strengthen risk management and improve financial and non-financial transparency.
Responding to IFRS S1 and S2: Practical Strategies for Sustainability Professionals
- Data Collection and Report Preparation
Collect accurate ESG data: Help companies collect environmental, social and governance data from all departments, ensuring accuracy and completeness and updating it regularly to meet IFRS requirements.
Prepare clear, transparent sustainability reports: In line with IFRS S1, integrate sustainability information such as carbon emissions, reduction targets and risk management into corporate annual reports, ensuring content is clear and easy for stakeholders to understand. - Climate Response and Emissions Reduction Plans
Set carbon emissions reduction targets: Under IFRS S2, companies need specific reduction targets and action plans, such as improving energy efficiency and using renewable energy.
Implement plans collaboratively: Work across departments to embed emissions reduction measures into daily operations and ensure targets are met. - Integration into the Corporate Sustainability Roadmap
Integrate sustainability strategically: Connect sustainability goals with core business strategy, promoting green innovation and sustainable supply chain management to strengthen market competitiveness.
Keep learning and adapting: Monitor the latest regulations and standards and participate in professional training to keep corporate sustainability strategies aligned with international trends and continuously improve performance.
Corporate Response Measures
- Promote Cross-Department Collaboration
IFRS S1 and S2 involve multiple departments. Companies must strengthen collaboration to ensure data sharing and consistency. A dedicated sustainability team or committee helps align sustainability goals with corporate strategy and put policies into practice. - Resource Allocation and Budget Planning
Meeting reporting requirements takes additional funding and staff. Companies should plan resources based on their financial position and sustainability needs and demonstrate returns on investment to management, balancing short-term financial goals with long-term sustainability. - Data Consistency and Digital Tools
Sustainability professionals should help clarify data and establish uniform formats to improve reporting transparency and trust. To address inconsistent data, companies should upgrade data management systems to ensure accuracy and compliance with standards. For example, Sustaihub's Syber platform can comprehensively improve corporate sustainability management.
Long-Term Impacts of IFRS S1 and S2
- Global trends: IFRS S1 and S2 will become a globally adopted sustainability reporting framework, encouraging companies to improve ESG transparency.
- Innovation and investment: Companies will increase innovation and investment in areas such as climate response and carbon emissions reduction to improve sustainability.
- Continuous learning: Sustainability professionals need to keep learning to respond to the latest standards and maintain corporate competitiveness.
The Critical Role and Future Opportunities of Sustainability Professionals
As IFRS S1 and S2 are implemented, sustainability professionals will become increasingly important—not only as implementers of new requirements, but also as drivers and innovators of corporate sustainability. In this rapidly changing environment, effectively understanding and responding to sustainability reporting requirements and connecting them with long-term corporate strategy will be key to competitiveness.
Improve Reporting Transparency and Efficiency with Sustaihub's SaaS Services
Sustaihub's Syber Sustainability Management Platform provides an IFRS framework, helping companies map their data to relevant indicators and meet sustainability reporting needs. Built-in review workflows support stronger internal controls, ensure data accuracy and consistency, and improve the efficiency of financial data collection, analysis and disclosure. Intelligent data integration and analysis let you adjust report content in real time, comply with the latest regulations and maintain a competitive advantage as rules change. Try it now to get ahead in sustainability management!
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Turn this article into your next step
If this article touches disclosure, carbon inventory, or report preparation, use the system or database to check how peers handle it.
Updated on October 6, 2026. Key update: the latest change reducing mandatory IFRS adoption in Taiwan from approximately 1,970 to approximately 560 companies.
FAQ
View AllWhat are the core requirements of IFRS S1 and S2?
IFRS S1 requires companies to disclose ESG risks and opportunities in annual reports and explain sustainability strategies, risk management measures and performance. IFRS S2 focuses on climate change, requiring greenhouse gas emissions data, reduction targets and implementation steps. Together, the standards provide unified guidance for integrating sustainability strategies and strengthening risk management.
How should companies address IFRS S1 and S2 data collection requirements?
Companies need to collect ESG data from all departments, ensure accuracy and completeness, and update it regularly to meet IFRS requirements. This includes preparing clear, transparent sustainability reports and integrating carbon emissions, reduction targets and risk management information into annual reports.
What emissions reduction requirements does IFRS S2 impose on companies?
Under IFRS S2, companies need specific reduction targets and action plans, such as improving energy efficiency and using renewable energy. Cross-department collaboration should embed reduction measures into daily operations to ensure targets are achieved.
Turn Sustainability Disclosure into a Collaborative Workflow
Use Syber to manage section ownership, metric data, review records, and disclosure progress, turning IFRS, SASB, and GRI requirements into a team workflow.
How to decide the next stepTurn the disclosure requirements in the article into sections, data sources, and owners first. If collaboration, version control, or verification is involved, then evaluate whether a reporting workflow is needed.