IFRS S2 Requirements Explained: 2027 Amendments, Reliefs, Morocco

What is IFRS S2, in plain terms?

IFRS S2 is the global climate disclosure standard written for investors and lenders. It asks a company which climate-related risks and opportunities could affect its cash flows, access to finance or cost of capital, and how it manages them.

Its full title is IFRS S2 Climate-related Disclosures. It was issued on 26 June 2023 by the International Sustainability Standards Board (ISSB), the IFRS Foundation board that sets sustainability standards, at the same time as IFRS S1. According to ifrs.org, its objective is to provide information that is useful to users of general purpose financial reports when they decide whether to provide resources to the company: shareholders, banks and other creditors.

That last row matters most. According to IFRS Foundation educational material (January 2025), IFRS S1 and IFRS S2 become mandatory when regulators integrate them into their financial reporting frameworks: the ISSB’s effective date creates no obligation on its own.

IFRS S2 looks at climate from the funder’s side: what climate change could cost or bring the company. The European ESRS apply double materiality, which also covers the company’s impacts. According to the ESRS–ISSB interoperability guidance published by the IFRS Foundation, the result of joint work by the ISSB, the European Commission and EFRAG, both sets of standards define information material to investors in the same way.

This guide explains the text of the standard. For the assessment method itself (site exposure, physical and transition risks, scenario choice), see our IFRS S2 climate risk service.

How is IFRS S2 structured?

IFRS S2 is built on four pillars of core content, plus metrics, application guidance (Appendix B) and transition provisions (Appendix C). Industry-based Guidance accompanies it: a company must consider it when identifying risks and choosing the metrics specific to its industry.

According to the IFRS Foundation’s comparison (republished February 2026), IFRS S2 keeps the structure of the four TCFD recommendations but asks for more detail: where risks are concentrated in the value chain, which inputs are used to identify them, how targets will be met. Another difference: the TCFD encouraged Scope 1 and 2 disclosure regardless of materiality, whereas ISSB Standards require information only if it is material to investors.

What are the seven cross-industry metric categories?

Paragraph 29 requires every company, whatever its industry, to report on seven metric categories. They are the same categories as in the TCFD guidance.

A manufacturer with no internal carbon price does not invent one: it says so. Categories (b) to (d) are the most data-hungry, because each risk must be tied to assets and revenue.

What does IFRS S2 require on greenhouse gas emissions?

Measurement under the GHG Protocol, reported by scope, with the method and assumptions. According to the IFRS Foundation’s GHG educational material (May 2025) and the text of the amendments:

• Measurement basis. The GHG Protocol Corporate Accounting and Reporting Standard (Revised Edition, 2004), unless an authority or the listing exchange requires another method. IFRS S2 only uses the GHG Protocol’s measurement requirements, and only where they do not conflict with the standard.
• Conversion. The seven gases are converted to CO2 equivalent using 100-year global warming potential values from the latest IPCC assessment report available at the reporting date (paragraphs B21 and B22).
• Scope 1 and 2. Split between the consolidated accounting group and other investees (associates, joint ventures, unconsolidated subsidiaries). The company states its approach (control or equity share) and why it chose it (B27).
• Scope 2. Reported on a location-based basis, with information on contractual instruments (renewable electricity certificates, power purchase agreements) that users need.
• Scope 3. All 15 categories of the Corporate Value Chain (Scope 3) Standard (2011) must be considered and the categories included disclosed. The measurement framework (B38 to B57) prioritises directly measured data, data from specific value-chain activities, timely data that reflects the country and technology, and verified data.

The GHG Protocol itself is being revised: together with ISO it is preparing a consolidated standard, with publication estimated for the fourth quarter of 2028. The 2004 edition remains the reference.

A carbon footprint built under ISO 14064-1:2018 can therefore be converted, after a review of boundaries, consolidation approach and Scope 2. Our ISO 14064-1 requirements guide covers the inventory itself; our carbon footprint service describes how we build it.

What does the standard require on targets and carbon credits?

Full transparency on how a target will be met. According to the TCFD comparison and the IFRS Foundation guidance on transition plans (June 2025), the company discloses:

• whether the target was validated by a third party and how the latest international agreement on climate change informed it;
• whether the target was derived using a sectoral decarbonisation approach;
• for a net emissions target, the associated gross target, disclosed separately (B68 and B69);
• the planned use of carbon credits to reach a net target, and how far the target relies on them (B70 and B71).

Disclosing a plan that relies on carbon credits does not license a marketing claim. For products sold in the European Union, Directive (EU) 2024/825 has banned, since 27 September 2026, claiming on the basis of offsetting that a product has a neutral, reduced or positive greenhouse gas impact: see our article on Directive (EU) 2024/825 and environmental claims. Our position: reduce first, claim only what can be proven. The reduction plan itself belongs to our decarbonisation strategy service.

What did the December 2025 amendments to IFRS S2 change?

They ease four greenhouse gas requirements without touching the four pillars. The ISSB issued them on 11 December 2025; they apply to annual periods beginning on or after 1 January 2027, with early application permitted provided the company says so (paragraph C1B).

According to the ISSB, they respond to application challenges seen as the first companies applied the standard, and reduce complexity, the risk of duplicative reporting and cost without significantly reducing the usefulness of the information.

Two transition rules complete the text. The first-year Scope 3 relief now also covers financed emissions information (amended C4(b)). A company that already applied IFRS S2 adjusts the prior-period comparatives unless it is impracticable (C6). The ISSB also issued consequential amendments to three SASB Standards to align their financed emissions metrics.

For a Moroccan manufacturer, the first two changes are less remote than they look: a bank’s financed emissions are calculated from its borrowers’ data, so borrowers receive requests for documented emissions, by site and by year. The two jurisdictional reliefs matter to groups with a subsidiary that already reports emissions under a national method.

Which reliefs does the standard offer in the first year?

Four transition reliefs, plus permanent proportionality mechanisms. They allow a company to report from year one without all the data, provided it states which reliefs it uses.

Beyond year one, the standard stays proportionate. The company uses “all reasonable and supportable information that is available at the reporting date without undue cost or effort” to identify risks, estimate anticipated financial effects, run scenario analysis, measure Scope 3 and prepare some cross-industry metrics. It may give only qualitative information on financial effects when they cannot be separately identified or measurement uncertainty is too high.

Proportionate does not mean optional: under paragraph 72 of IFRS S1, a company can state compliance with ISSB Standards only if it applies all of their requirements.

What does IFRS S2 mean for a listed company, a subsidiary or a borrower in Morocco?

No direct obligation as at 11 November 2026, but three channels through which the standard already arrives: the bank, the parent group and the capital market. Each touches different parts of the standard.

Morocco appears in neither the IFRS Foundation’s jurisdictional profiles nor its snapshots (page updated 4 November 2026). In Africa, profiles exist for Ghana, Kenya, Nigeria, Rwanda, Tanzania, Zambia and Zimbabwe, and a snapshot for Uganda: a group with subsidiaries there should check local rules. In the United Kingdom, the government published the UK Sustainability Reporting Standards (UK SRS S1 and UK SRS S2) on 25 February 2026, developed by assessing and endorsing the ISSB Standards, according to gov.uk.

The listed company. On the AMMC circulars page, accessed on 11 November 2026, the most recent text dates from 2023, and none imposes IFRS S2. The AMMC joined a network on the adoption of ISSB Standards in emerging markets in December 2024. Building the ESG report on the IFRS S2 structure creates no compliance risk and prepares for what comes next.

The subsidiary. Under paragraph 20 of IFRS S1, sustainability disclosures cover the same reporting entity as the financial statements: a group publishing consolidated accounts therefore covers its Moroccan subsidiaries. They receive precise requests: emissions by site, physical hazards (water, heat, flooding), share of assets exposed.

The borrower. Moroccan banks apply Bank Al-Maghrib Directive No. 1/W/2025, aligned with ISSB Standards, and Directive No. 2/W/2025, which requires them to send the central bank data on their large borrowers’ exposure to climate risks, within 24 months from January 2025 (48 months for requirements applying to subsidiaries), according to Bank Al-Maghrib’s 2025 banking supervision report. The report gives neither the definition of “large borrowers” nor the detailed list of data requested, and the full text of Directive No. 2/W/2025 is not published on bkam.ma as at 11 November 2026.

The exporter. European customers usually think in ESRS or VSME terms: see our CSRD, VSME and ESG questionnaires service. Emissions measured for IFRS S2 serve both.

How do you prepare for IFRS S2 in twelve months?

Build the data that feeds every pillar first, then draft. Starting from a carbon footprint and a risk map, a first climate disclosure fits within one reporting year, using the first-year reliefs.

1. Quarter 1: boundary and governance. Reporting entity (the same as the accounts), board body in charge of climate, inventory of requests received.
2. Quarter 2: emissions. Inventory in IFRS S2 format; Scope 3 collection started for the following year.
3. Quarter 3: risks and scenarios. Risks by site and market, linked to assets and revenue; method described on our IFRS S2 climate risk service page.
4. Quarter 4: drafting and evidence. Four pillars, reliefs disclosed, evidence file for the auditor.

Before publishing, go through this list:

• The reporting entity is the same as in the financial statements.
  
• A board body and a management lead oversee climate, and their roles are written down.
  
• Risks and opportunities are tied to sites, assets and activities, with their time horizon.
  
• The scenarios used are named, sourced and justified.
  
• Scope 1 and 2 follow the GHG Protocol, split between the consolidated group and other investees; location-based Scope 2 is disclosed.
  
• The Scope 3 categories included are listed, or the first-year relief is disclosed.
  
• All seven cross-industry metric categories are addressed, including by a reasoned “none”.
  
• Gross and net targets are separate, and any planned use of carbon credits is explained.
  
• The reliefs used (C4, climate first, comparatives) are disclosed.
  
• A mapping table links the disclosures to the AMMC ESG report, bank questionnaires and group requests.
  
• The amendments effective on 1 January 2027 have been reviewed, and early application decided.