New IFRS Guidance Aims to Streamline Climate Transition Disclosures
Overview
The IFRS Foundation has released new guidance to help companies disclose their climate transition plans more effectively under IFRS S2. This move aims to reduce fragmentation in sustainability reporting and support global consistency in climate-related disclosures.
A Step Toward Clarity in Climate Reporting
On June 23, 2025, the IFRS Foundation published a new guidance document to support companies in disclosing their climate-related transition plans in line with IFRS S2 Climate-related Disclosures. This guidance is part of the Foundation’s broader effort to implement the ISSB (International Sustainability Standards Board) Standards and enhance the quality and comparability of sustainability reporting worldwide.
What the Guidance Covers
The document provides practical direction for companies on how to disclose information about their climate transition strategies, including:
Mitigation and adaptation efforts: How companies plan to reduce emissions and adapt to climate risks.
Strategic alignment: How transition plans fit into broader corporate strategies.
Resource allocation: What actions and investments are being made to support the transition.
Importantly, while IFRS S2 does not mandate that companies have a transition plan, it does require disclosure of material information about climate-related risks and opportunities that could impact a company’s future.
Built on Global Collaboration
The guidance builds on the work of the UK’s Transition Plan Taskforce (TPT), which the IFRS Foundation took over in 2024. It incorporates feedback from global stakeholders through roundtables and consultations, ensuring the guidance is globally relevant and aligned with the ISSB’s “global baseline” for sustainability disclosures.
Why This Matters
Fragmented and inconsistent climate disclosures have long been a challenge for investors and companies alike. This new guidance aims to:
Reduce reporting costs for preparers.
Improve decision-useful information for investors.
Encourage adoption of high-quality, globally consistent sustainability standards.
Sue Lloyd, Vice-Chair of the ISSB, emphasized that the guidance is not just a compliance tool but a source of inspiration for companies striving to communicate their climate strategies more effectively.
Looking Ahead
As jurisdictions around the world begin adopting ISSB Standards, this guidance will serve as a critical resource for companies navigating the evolving landscape of climate-related reporting. It’s a clear signal that the IFRS Foundation is committed to supporting a transparent, consistent, and investor-focused approach to sustainability disclosures.
