What are climate-related risks under IFRS S2?
They are the physical and transition risks that could reasonably be expected to affect a company’s cash flows, its access to finance or its cost of capital over the short, medium or long term. IFRS S2 also requires disclosure of climate-related opportunities.
IFRS S2 Climate-related Disclosures was issued in June 2023 by the International Sustainability Standards Board (ISSB) of the IFRS Foundation, and is effective for annual reporting periods beginning on or after 1 January 2024. Its objective, according to ifrs.org, is to give users of general purpose financial reports information that is useful when they decide whether to provide resources to the company.
Two families of risk:
- Physical risks: the effects of extreme weather events (acute risks: floods, heatwaves, storms) and of longer-term shifts (chronic risks: declining water resources, rising temperatures, sea-level rise).
- Transition risks: the effects of the shift to a low-carbon economy, whether they come from regulation, markets, customers, technology or reputation.
Opportunities are the other side: a market opening up for low-carbon products, energy savings, access to green finance.
IFRS S2 sits on top of IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information, issued at the same time, which sets the general framework for all sustainability topics; early application of one requires the other. According to ifrs.org, IFRS S2 integrates and builds on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and includes industry-based requirements derived from the SASB Standards.
Amendments. In December 2025 the ISSB issued Amendments to Greenhouse Gas Emissions Disclosures, effective for annual reporting periods beginning on or after 1 January 2027, with early application permitted. A project to amend the IFRS S2 industry-based guidance was still active on ifrs.org on 11 November 2026.
Who reports under IFRS S2, and who is affected in Morocco?
In Morocco, no published rule requires non-financial companies to apply IFRS S2 as at 11 November 2026. But banks apply Bank Al-Maghrib directives aligned with the ISSB, listed companies publish an ESG report, and foreign groups ask their subsidiaries for data. Most companies are therefore affected indirectly.
Situation | Who asks | What is expected | Basis |
|---|---|---|---|
Bank or credit institution | Bank Al-Maghrib (the central bank) | Disclosure of governance, strategy and risk management for climate-related risks and opportunities | Directive No. 1/W/2025, aligned with the ISSB standards |
Large borrower of a bank | Its bank | Qualitative and quantitative data on its exposure to climate risk, often a carbon footprint | Bank Al-Maghrib Directive No. 2/W/2025 |
Listed company (issuer) | AMMC, the capital markets authority | ESG report included in the annual financial report | Circular No. 03/19, Annex III.2.M |
Subsidiary of a group reporting under IFRS S2 or ESRS | The group | Subsidiary data for the consolidated report: site risks, emissions | Group reporting framework |
Supplier to a European customer | The customer | Emissions, targets, sometimes climate risks | Customer questionnaire, CSRD knock-on effect — see CSRD, VSME and supplier ESG questionnaires |
Adoption is moving elsewhere too: on 25 February 2026 the UK government published the UK Sustainability Reporting Standards (UK SRS S1 and UK SRS S2), created by assessing and endorsing the IFRS Sustainability Disclosure Standards, according to gov.uk.
What does IFRS S2 require, pillar by pillar?
IFRS S2 organises disclosures into four pillars: governance, strategy, risk management, and metrics and targets. Each answers a specific question from investors and lenders; the table below shows what you need to prepare.
IFRS S2 pillar | Question it answers | What you must provide |
|---|---|---|
Governance | Who, on the board and in management, oversees climate-related risks and opportunities, and how? | Responsible body or person, how often the board is informed, skills, how climate feeds into decisions and, where relevant, remuneration |
Strategy | Which risks and opportunities, over which horizons, and with what effect on the business model and the accounts? | Risks and opportunities by horizon, current and anticipated effects on financial position, transition plan if any, scenario-based resilience analysis |
Risk management | How does the company identify, assess, prioritise and monitor these risks? | Written method, data sources, prioritisation criteria, integration into overall risk management |
Metrics and targets | Where does the company stand, and where is it heading? | Scope 1, 2 and 3 emissions, cross-industry and industry-based metrics, climate targets set by the company or required by law, and progress made |
The last pillar relies on your carbon footprint, quantified under ISO 14064-1:2018 and the GHG Protocol: see our ISO 14064-1 requirements guide.
Materiality. IFRS S2 only asks for information that is material to users of financial reports. The choice of risks kept, and of those left out, must be justified and documented: it is the first thing an assurance provider will look at.
Physical or transition risk: which ones hit your sector?
Usually both, with different weights: an agri-food site is first exposed to water and heat, an exporter of carbon-intensive goods first to the transition. The table gives generic Moroccan examples, without figures, to start your own risk map.
Risk type | Driver | Example of a site or activity in Morocco (anonymous) | Possible financial effect |
|---|---|---|---|
Acute physical | Flooding | Plant in an industrial zone built on a flood plain, raw materials stored at ground level | Production stoppage, damage to stock and equipment, higher insurance premiums |
Acute physical | Heatwave | Cannery or cold store on the Atlantic coast, cold chain under strain | Higher electricity use, product losses, lower productivity |
Chronic physical | Water stress, drought | Agri-food processor relying on irrigated supplier farms; textile denim-washing unit | Supply disruption, higher water costs, abstraction limits |
Chronic physical | Sea-level rise, coastal erosion | Port-side site or seafood processing plant on the shoreline | Asset impairment, protection works, relocation |
Transition — regulation | EU Carbon Border Adjustment Mechanism (CBAM) | Cement, fertiliser, steel or aluminium producer exporting to the European Union | Cost passed back by the importer, lost market share without data — see CBAM for exporters |
Transition — market | Customer carbon requirements | Automotive supplier or packaging maker asked for its emissions and a reduction target | Delisting, less favourable commercial terms |
Transition — finance | Bank and investor climate policies | Emission-intensive manufacturer applying for an investment loan | Tighter lending conditions, more data requests |
Transition — technology | Electrification, energy efficiency, on-site renewables | Site that must replace boilers and kilns before the end of their useful life | Earlier capital spending, impaired assets |
Transition — reputation and legal | Environmental claims | Food brand printing “carbon neutral” on a product sold in the EU | Claims withdrawn, litigation, loss of trust |
Opportunities show up in the same table: an exporter that documents its emissions keeps its customers, a plant that uses less energy lowers its operating costs. In industry and energy and food and beverage, both families of risk often add up.
How do you choose and run a climate scenario analysis?
By selecting at least two contrasting climate and transition pathways from recognised public sources, then testing what each would change for your sites, markets and accounts. IFRS S2 requires a climate resilience assessment based on scenario analysis, using an approach proportionate to the company’s circumstances.
Our approach:
- Set the horizons. Short, medium and long term, based on asset lives and investment plans, written in the method note.
- Choose the scenarios. A fast transition (stricter regulation, more contained physical hazards) and a slow transition (stronger physical hazards), each cited with its source, year and assumptions. We never invent a pathway.
- Translate scenarios into business variables. Water availability by site, number of very hot days, energy costs, customer requirements, EU market access rules.
- Measure the effect. Qualitatively first, by horizon, then in figures where data allow: revenue at risk, operating costs, capital spending, asset values.
- Conclude on resilience. What the current strategy can absorb, what would need to change, and the main uncertainties.
Why do Moroccan banks ask borrowers for carbon data?
Because Bank Al-Maghrib, Morocco’s central bank, requires them to manage, disclose and report their climate-related financial risks, and those risks sit largely with their customers. Three directives frame this work, and the latest targets large borrowers directly.
- Directive No. 5/W/2021 on the management of financial risks related to climate change and the environment. Issued in March 2021, according to the joint press release of Bank Al-Maghrib, the EBRD and the Moroccan banking association (GPBM) of 9 May 2022, which announced support to banks, notably on scenario analysis and climate stress testing.
- Directive No. 1/W/2025 on the disclosure of climate-related financial risks. Issued in January 2025. According to Bank Al-Maghrib’s annual banking supervision report (2025 financial year), it sets a disclosure framework in line with the ISSB standards: banks disclose their governance processes, their strategy and their process for identifying, assessing, prioritising and monitoring climate-related risks and opportunities. Its requirements are phased in over 24 to 48 months from publication, depending on the type of information.
- Directive No. 2/W/2025 on the collection and reporting of information on large borrowers’ exposure to climate-related financial risks. Issued in January 2025. According to the same report, it requires banks to send Bank Al-Maghrib qualitative and quantitative data on how they monitor their large borrowers’ exposure, and aims to strengthen banks’ engagement with their large counterparties on climate-related processes and activities. It takes effect 24 months from January 2025, extended to 48 months for requirements that apply to subsidiaries.
The annual banking supervision report (2025 financial year) states that Directive No. 2/W/2025 was signed in January 2025, without giving the day, but gives neither the definition of “large borrowers” nor the detailed list of data requested from banks. As at 11 November 2026, the full text of Directives No. 1/W/2025 and No. 2/W/2025 is not published on bkam.ma: the compendium of legislative and regulatory texts stops at end-2023, and only this report describes them.
For the borrower, the consequence is practical: the bank asks for emissions, site-level exposure and a transition plan. A documented carbon footprint to ISO 14064 and a site-level risk map give the same solid answer to every bank you work with. Development lenders ask similar questions: see EBRD and IFC ESG requirements.
What does the AMMC require from listed companies?
An ESG report included in the annual financial report, under Annex III.2.M of AMMC Circular No. 03/19 on financial transactions and information. As at 11 November 2026, the AMMC circulars page lists no circular issued after 2023, and none requires IFRS S2.
Circular No. 03/19 of 20 February 2019 was amended and supplemented by Circular No. 02/20 of 22 December 2020. For an issuer, the safest route is to build the climate risk assessment to IFRS S2 and map it to the ESG report content required by the annex: the same data then serve the circular, banks and foreign investors.
Where do the ISO climate adaptation standards fit?
They provide the method for assessing physical risk and planning adaptation, where IFRS S2 only says what to disclose. ISO 14091 is for assessing vulnerability and risk, ISO 14090 for organising adaptation, ISO 14092 for local governments.
Standard | Purpose | For whom | Use in an IFRS S2 approach |
|---|---|---|---|
ISO 14090:2019 — Adaptation to climate change — Principles, requirements and guidelines | Principles, requirements and guidelines for integrating adaptation within an organisation, understanding impacts and uncertainties and using them in decisions | Any organisation, whatever its size | Framework for the adaptation plan and its governance |
ISO 14091:2021 — Guidelines on vulnerability, impacts and risk assessment | Assessing risks from the potential impacts of climate change, now and in the future, and understanding vulnerability | Any organisation | Method for site-level physical risk assessment |
ISO 14092:2026 (formerly ISO/TS 14092:2020) | Requirements and guidance on adaptation planning for local governments and communities | Local authorities, communities | Dialogue with the municipality or industrial zone on shared risks (water, floods) |
ISO 14090:2019 has been confirmed by ISO; ISO 14091:2021 is under systematic review (stage 90.60), with no new edition announced on iso.org as at 11 November 2026. ISO 14092:2026, published in February 2026, replaces the withdrawn technical specification ISO/TS 14092:2020. None of these is a company certification scheme: they structure a method.
What about climate finance: ISO 14097 and the ISO 14030 series?
ISO 14097:2021 is written for financiers, the ISO 14030 series for issuers of green debt. A company does not apply them for its own IFRS S2 report, but they show what its banks and investors will ask.
According to iso.org, ISO 14097:2021 gives investors and lenders a framework to assess, measure, monitor and report how their investments and financing align with low-carbon and adaptation pathways, their impact, and the climate risks to their financial assets; it is under systematic review (stage 90.60). In Morocco, Bank Al-Maghrib’s banking supervision report (2025 financial year) mentions preparatory work on a national green financial taxonomy.
The ISO 14030 series covers green debt instruments: ISO 14030-1:2021 for the green bond process, ISO 14030-2:2021 for green loans, ISO 14030-3:2022 for the taxonomy and ISO 14030-4:2021 for verification programmes. If you are preparing a green loan or a green bond, it works as a checklist; verification is for an independent body.
How do you link metrics, targets and the transition plan?
Start from a verifiable emissions inventory, then set dated targets that your reduction plan can actually deliver. The IFRS S2 metrics and targets pillar is only credible if its figures come from the same inventory as your answers to customers and banks.
- One inventory. The scope 1, 2 and 3 emissions you disclose under IFRS S2 are those of your carbon footprint, quantified under ISO 14064-1:2018 and the GHG Protocol Corporate Standard (revised edition, 2004), with the same boundaries. The GHG Protocol and ISO are preparing a joint standard, with publication estimated for the fourth quarter of 2028: nothing has been published yet.
- Targets the plan can meet. A reduction target without quantified levers does not survive an analyst’s reading. The plan, pathway and readiness for a science-based target are covered on our decarbonisation strategy page.
- Careful claims. A “net zero” or “carbon neutral” goal is disclosed as a commitment with its plan, never as a state already reached. For products sold in the EU, Directive (EU) 2024/825 has, since 27 September 2026, banned claims based on emissions offsetting that a product has a neutral, reduced or positive impact on the environment in terms of greenhouse gas emissions (point 4c added to Annex I of Directive 2005/29/EC). Our position: reduce first, claim only what you can prove.
If you are certified to ISO 14001, your environmental aspects review and energy indicators are already a good base for these pillars.
Is your climate risk file ready?
Run through these points before you disclose under IFRS S2, answer your bank or send data to your group.
What ACG does for your climate risks
ACG assesses, calculates, drafts and trains; an auditor or independent assurance provider gives assurance. The firm has delivered 502 projects, brings together 10 in-house consultants and more than 100 qualified external experts, and has trained more than 120,000 people. We work with listed companies, groups and manufacturers in Morocco and across Africa, starting from their existing data and systems.
We train your team during the project so that it can keep the assessment up to date on its own: see our training catalogue. For all your ESG requests, see ESG and CSR; for development lenders, our EBRD performance requirements guide; for EU market access, CBAM: definitive period and 2027 deadlines. To start the conversation, describe your request.