Key Impact Points:
- ISSB proposes amendments to ease Scope 3 emissions reporting, mainly impacting financial firms.
- Relief measures would allow entities to exclude emissions tied to derivatives, facilitated financing, and insurance.
- Public comment period on changes is open until June 27, 2025.
ISSB Responds to Market Feedback
The IFRS Foundation’s International Sustainability Standards Board (ISSB) announced proposed amendments to its climate-related disclosure standard (IFRS S2), aiming to ease application challenges without compromising decision-useful information for investors.
The proposed changes would significantly affect financial sector companies, offering new reliefs to exclude Scope 3 emissions tied to derivatives, facilitated emissions, and insurance-associated emissions.
Sue Lloyd, ISSB Vice-Chair, emphasized:
“It is the role of a responsible standard-setter to listen to market feedback from the earliest implementation stages, and to support preparers in the application of our Standards. As a market-focused standard-setter, we have taken steps to respond in a timely manner by proposing targeted amendments helping preparers where possible, without causing too much disruption and ensuring that our Standards continue to enable the provision of decision-useful information to investors.”
Key Proposed Changes
The amendment would allow entities to limit Scope 3 Category 15 emissions disclosure to financed emissions only, excluding derivatives and other specified activities. Companies would be required to disclose the amount of financial activity excluded.
Additional proposals include:
- Relief from using the Global Industry Classification Standard (GICS) for some financed emissions disclosures.
- Permission to use jurisdiction-required Global Warming Potential (GWP) values not aligned with the latest IPCC standards.
- Clarifications on allowing alternative GHG measurement methods beyond the Greenhouse Gas Protocol when authorized by local jurisdictions.
These reliefs aim to minimize duplication of reporting efforts and reduce compliance costs, supporting companies as they implement IFRS S2.
Maintaining Transparency and Integrity
Sue Lloyd added:
“Proposing these amendments to a relatively new Standard is not a decision that was taken lightly—we have carefully considered the need for such amendments and have sought to balance the needs of investors while considering cost-effectiveness for preparers. Our due process is fundamentally important to us.”
Optionality is embedded in the design: companies and jurisdictions can decide whether to apply the reliefs without jeopardizing alignment with ISSB Standards.
Next Steps
The Exposure Draft is open for public comment until June 27, 2025. The ISSB aims to finalize the amendments by the end of 2025 after analyzing stakeholder feedback.
Companies currently applying IFRS S1 and IFRS S2 should continue using the issued standards, while jurisdictions adopting “based on” versions of the ISSB Standards are encouraged to maintain global consistency.
Access the Exposure Draft here and the response form here.
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