ISSB publishes Amendments to IFRS S2 – Amendments to Greenhouse Gas Emissions Disclosures
ISSB publishes Amendments to IFRS S2 – Amendments to Greenhouse Gas Emissions Disclosures
On 11 December 2025, the International Sustainability Standards Board (ISSB) issued Amendments to Greenhouse Gas Emissions Disclosures, which resulted in targeted amendments to IFRS S2 Climate-related Disclosures.
These amendments address implementation challenges related to measuring greenhouse gas emissions, which are a required disclosure in IFRS S2.
The revised requirements clarify the scope of emissions that entities must disclose, refine the interaction between IFRS S2 and the materiality principle in IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information, and ease operational burdens associated with data collection, classification, and measurement.
Background
Following the publication of IFRS S2, preparers raised concerns about the practicality of reporting full Scope 3 Category 15 emissions. These emissions include a broad range of financial activities, many of which do not belong clearly within existing financed emissions methodologies (e.g. standards developed by the Partnership for Carbon Accounting Financials, or PCAF). In particular, emissions associated with derivatives, facilitated financing transactions, and certain insurance-related activities may be particularly challenging to measure.
Stakeholders raised other implementation challenges, including the lack of explicit permission to use classification systems other than the Global Industry Classification Standards (GICS), how certain jurisdictional reliefs already available in IFRS S2 were meant to be interpreted and a lack of flexibility concerning the use of global warming potential (GWP) values other than those provided by the IPCC.
To address these challenges, the ISSB released Exposure Draft (ED) ISSB/ED/2025/1 proposing a series of amendments to address these concerns.
Final Amendments to IFRS S2
The final amendments permit entities to limit the measurement of Scope 3 - Category 15 emissions to only financed emissions, introduce a mandatory subtotal for financed emissions within Scope 3 - Category 15 emissions, extends jurisdictional reliefs for measurement methods and GWP values, and provides greater flexibility when selecting an industry-classification system for disaggregated disclosures.
The amendments are effective for annual reporting periods beginning on or after 1 January 2027, with early application permitted. Further information on each aspect of the amendments is set out below.
Limitation of Category 15 Emissions to Financed Emissions
The amendments permit an entity to limit its Category 15 emissions to financed emissions only, rather than the broader set of financial activities that some entities may participate in. These financed emissions include those derived from loans, project finance, bonds, equity investments, undrawn commitments, and assets under management. The amendments also permit entities to exclude emissions related to derivatives.
Updated Disclosure Requirements: Qualitative Instead of Quantitative
Requirement to Present Category 15 Totals and Financed Emissions Subtotal
Jurisdictional Reliefs – Measurement Methods and GWP Values
Industry Classification for Financed Emissions
Entities Expected to Be Affected
The amendments relating to financed emissions will primarily affect entities with significant lending, investing, or asset management activities, such as banks, insurers, finance companies, pension funds, and investment managers. The other amendments may affect a variety of entities, particularly those operating in jurisdictions that require jurisdictional approaches to measuring emissions that differ from the requirements in the original, unamended version of IFRS S2.
Next Steps
Entities should carefully consider whether the amendments may be relevant to their adoption of IFRS Sustainability Disclosure Standards. Entities that already apply IFRS Sustainability Disclosure Standards should consider whether the amendments may benefit their organisations by simplifying the application of the requirements of IFRS S2.
Refer to the IFRS Foundation’s website for more information on the amendments, including a summary of the amendments in an ‘at a glance’ format.
These amendments address implementation challenges related to measuring greenhouse gas emissions, which are a required disclosure in IFRS S2.
The revised requirements clarify the scope of emissions that entities must disclose, refine the interaction between IFRS S2 and the materiality principle in IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information, and ease operational burdens associated with data collection, classification, and measurement.
Background
Following the publication of IFRS S2, preparers raised concerns about the practicality of reporting full Scope 3 Category 15 emissions. These emissions include a broad range of financial activities, many of which do not belong clearly within existing financed emissions methodologies (e.g. standards developed by the Partnership for Carbon Accounting Financials, or PCAF). In particular, emissions associated with derivatives, facilitated financing transactions, and certain insurance-related activities may be particularly challenging to measure.
Stakeholders raised other implementation challenges, including the lack of explicit permission to use classification systems other than the Global Industry Classification Standards (GICS), how certain jurisdictional reliefs already available in IFRS S2 were meant to be interpreted and a lack of flexibility concerning the use of global warming potential (GWP) values other than those provided by the IPCC.
To address these challenges, the ISSB released Exposure Draft (ED) ISSB/ED/2025/1 proposing a series of amendments to address these concerns.
Final Amendments to IFRS S2
The final amendments permit entities to limit the measurement of Scope 3 - Category 15 emissions to only financed emissions, introduce a mandatory subtotal for financed emissions within Scope 3 - Category 15 emissions, extends jurisdictional reliefs for measurement methods and GWP values, and provides greater flexibility when selecting an industry-classification system for disaggregated disclosures.
The amendments are effective for annual reporting periods beginning on or after 1 January 2027, with early application permitted. Further information on each aspect of the amendments is set out below.
Limitation of Category 15 Emissions to Financed Emissions
The amendments permit an entity to limit its Category 15 emissions to financed emissions only, rather than the broader set of financial activities that some entities may participate in. These financed emissions include those derived from loans, project finance, bonds, equity investments, undrawn commitments, and assets under management. The amendments also permit entities to exclude emissions related to derivatives.
Updated Disclosure Requirements: Qualitative Instead of Quantitative
- Entities that choose to limit the scope of their Scope 3 – Category 15 emissions to only financed emissions must provide qualitative disclosures describing the nature of excluded activities. Specifically, entities must disclose what they consider to be derivatives for the purpose of applying the relief and describe other financial activities excluded from Category 15. This represents a shift from the proposals in the ED, which had proposed quantitative disclosures of the amounts excluded.
Requirement to Present Category 15 Totals and Financed Emissions Subtotal
- If an entity has included Category 15 emissions in its measure of Scope 3 emissions, the amendments require entities to disclose both the total Category 15 GHG emissions as well as the financed emissions subtotal within that total. This disclosure requirement ensures clarity on the extent to which entities have applied the above-noted relief concerning financed emissions.
Jurisdictional Reliefs – Measurement Methods and GWP Values
- The amendments extend jurisdictional relief for entities required by law or regulation to apply alternative GHG measurement methods or global warming potential (GWP) values. Entities may apply these alternative approaches to the reporting entity as a whole or in part (e.g. a subsidiary operating in a particular jurisdiction with such requirements) for as long as the jurisdictional requirement applies to that part of the entity.
Industry Classification for Financed Emissions
- IFRS S2 previously required the use of the GICS industry classification system for disclosing financed emissions by sector. The amendments introduce flexibility by permitting the use of an alternative industry classification system when it results in more meaningful disclosure. Entities must disclose which classification system was used and why it was selected.
Entities Expected to Be Affected
The amendments relating to financed emissions will primarily affect entities with significant lending, investing, or asset management activities, such as banks, insurers, finance companies, pension funds, and investment managers. The other amendments may affect a variety of entities, particularly those operating in jurisdictions that require jurisdictional approaches to measuring emissions that differ from the requirements in the original, unamended version of IFRS S2.
Next Steps
Entities should carefully consider whether the amendments may be relevant to their adoption of IFRS Sustainability Disclosure Standards. Entities that already apply IFRS Sustainability Disclosure Standards should consider whether the amendments may benefit their organisations by simplifying the application of the requirements of IFRS S2.
Refer to the IFRS Foundation’s website for more information on the amendments, including a summary of the amendments in an ‘at a glance’ format.
High-Level Comparison Between Exposure Draft and Final Amendments
| Topic | Exposure Draft ISSB/ED/2025/1 | Final Amendments to IFRS S2 (December 2025) | Comments |
| Scope relief for Category 15 | Limit to financed emissions; exclusion of derivatives allowed. | Relief retained; scope limitation formalised in IFRS S2.29A. | Fundamentally unchanged |
| Disclosure of excluded activities | Required quantitative information relating to excluded derivatives and financial activities. | Quantitative disclosures removed; only qualitative descriptions required. | Significant change |
| Category 15 totals | No requirement to show totals vs. financed emissions separately. | Requirement to disclose total Category 15 and financed emissions subtotal | New requirement |
| Industry classification | Relief from using GICs in limited instances | More broad relief from use of GICS with explanation of rationale | Significant change |
| Jurisdictional reliefs (method and GWP values) | Relief from methodologies required to measure GHG emissions if jurisdictional requirements in whole or in part require another methodology | Relief retained | Fundamentally unchanged |