Sustainability Reporting (IFRS S1 & S2) – Effective 1 January 2024
Sustainability Reporting (IFRS S1 & S2) – Effective 1 January 2024
Although the sustainability reporting under the requirements of IFRS S1 & S2 is currently not required by laws in Thailand, many Thai entities especially multinational corporation are alert in this initiative because it relates to doing business sustainably in their supply chain.
This article summarizes the key requirements of IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2: Climate-related Disclosures published by the International Sustainability Standards Board (ISSB) in June 2023, including what an entity needs to consider and prepare in advance before the sustainability reporting is mandatory by laws.
Although the sustainability reporting under the requirements of IFRS S1 & S2 is currently not required by laws in Thailand, many Thai entities especially multinational corporation are alert in this initiative because it relates to doing business sustainably in their supply chain.
This article summarizes the key requirements of IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2: Climate-related Disclosures published by the International Sustainability Standards Board (ISSB) in June 2023, including what an entity needs to consider and prepare in advance before the sustainability reporting is mandatory by laws.
To achieve the above disclosure requirements, an entity needs to consider and prepare in advance about its people (who will be responsible/accountable for or even consulted and informed about sustainability reporting), process (in determining material information about sustainability-related risks and opportunities for reporting which includes determining data requirements for each sustainability-related risk and opportunity to be reported under determined reporting boundary and value chain, setting the scope and parameters of data collection, collecting the data, and reporting on the collected data), and technology (to be used for facilitating in preparing sustainability reporting).
More explanations on climate-related disclosures (e.g., greenhouse gas reporting) will be included in next article, please stay tuned.
This article summarizes the key requirements of IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2: Climate-related Disclosures published by the International Sustainability Standards Board (ISSB) in June 2023, including what an entity needs to consider and prepare in advance before the sustainability reporting is mandatory by laws.
Although the sustainability reporting under the requirements of IFRS S1 & S2 is currently not required by laws in Thailand, many Thai entities especially multinational corporation are alert in this initiative because it relates to doing business sustainably in their supply chain.
This article summarizes the key requirements of IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2: Climate-related Disclosures published by the International Sustainability Standards Board (ISSB) in June 2023, including what an entity needs to consider and prepare in advance before the sustainability reporting is mandatory by laws.
| IFRS S1 sets out overall requirements for sustainability-related financial disclosures with the objective to require an entity to disclose relevant information with faithful representation about its sustainability-related risks and opportunities regarding governance, strategy, risk management, and metrics and targets as part of its general-purpose financial reports (which means an entity is required to report its sustainability-related financial disclosures at the same time and reporting period as its related financial statements) that could reasonably be expected to affect the entity’s cash flows, its access to finance or cost of capital over the short, medium or long term that is useful to primary users of general-purpose financial reports in making decisions relating to providing resources to the entity. An entity may apply IFRS Sustainability Disclosure Standard (“SDS”) irrespective of whether the entity’s related general-purpose financial statements are prepared in accordance with IFRS. However, even if the IFRS SDS contains a list of specific requirements or describes them as minimum requirements, an entity need not disclose such required information if the information is considered immaterial. The overall concept in considering whether information to be disclosed is material or not is similar to the material transaction concept specified in IFRS. |
| IFRS S2 sets out the requirements for identifying, measuring, and disclosing information about climate-related physical and transition risks and opportunities regarding governance, strategy (e.g., on climate resilience), risk management, and metrics and targets (e.g., greenhouse gases) that is useful to primary users of general-purpose financial reports in making decisions relating to providing resources to the entity. IFRS S2 requires specific disclosures about climate-related scenario analysis, including information about the inputs used by an entity. |
| Both standards are effective for annual periods beginning on or after 1 January 2024, with substantial transitional reliefs to allow preparers more time to align reporting of sustainability-related financial disclosures and financial statements i.e., in the first annual reporting period in which an entity applies IFRS S1, the entity is permitted to disclose information on only climate-related risks and opportunities (in accordance with IFRS S2), or report its sustainability-related financial disclosures after it publishes its related financial statements (e.g., at the same time as its next second-quarter or half-year interim general-purpose financial report, if the entity is required to provide such an interim report or within nine months of the end of the annual reporting period in which the entity first applies IFRS S1, if the entity is not required to and does not voluntarily provide an interim general-purpose financial report). An entity is not required to disclose comparative information in the first annual reporting period in which it applies IFRS S1 and IFRS S2. |
To achieve the above disclosure requirements, an entity needs to consider and prepare in advance about its people (who will be responsible/accountable for or even consulted and informed about sustainability reporting), process (in determining material information about sustainability-related risks and opportunities for reporting which includes determining data requirements for each sustainability-related risk and opportunity to be reported under determined reporting boundary and value chain, setting the scope and parameters of data collection, collecting the data, and reporting on the collected data), and technology (to be used for facilitating in preparing sustainability reporting).
More explanations on climate-related disclosures (e.g., greenhouse gas reporting) will be included in next article, please stay tuned.