A Simple Guide to IFRS S1: The Global Standard for Sustainability Reporting
In today’s world, companies are expected to be more open and honest about how they affect the environment and society. People want to know how businesses are handling things like climate change, pollution, and fair treatment of workers. Investors, banks, and regulators also want to understand whether these issues could affect a company’s financial health in the future.
To make sure businesses report this information clearly and in a standard way, the International Sustainability Standards Board (ISSB) created IFRS S1 – General Requirements for Disclosure of Sustainability-related Financial Information.
If this sounds complicated, don’t worry! We’ll break it down step by step in.
What is IFRS S1?
IFRS S1 is a set of rules that tell businesses what sustainability information they should report and how to report it properly.
It helps companies explain the risks and opportunities related to sustainability that could impact their business and financial future.
This standard is part of the IFRS Sustainability Disclosure Standards, created by the International Financial Reporting Standards (IFRS) Foundation.
In simple words: IFRS S1 helps businesses communicate their sustainability plans and risks in a way that is useful, clear, and comparable.
Why Was IFRS S1 Created?
In the past, companies reported sustainability information in different ways, making it difficult for investors and the public to compare businesses. Some companies only shared positive information and left out important risks. Others used confusing or unclear language.
IFRS S1 solves this problem by creating a global standard. Now, businesses can report sustainability-related information in a structured, reliable, and consistent way.
This helps:
✅ Investors – so they can understand risks and make better investment decisions.
✅ Companies – so they can show they are responsible and gain trust.
✅ Regulators & Governments – so they can monitor sustainability progress and prevent misleading claims.
Who Needs to Follow IFRS S1?
IFRS S1 applies to:
Any business that chooses to follow IFRS Sustainability Disclosure Standards.
Companies that are required to follow these standards by their government or stock exchange.
Businesses of all sizes and industries, as long as their sustainability issues could affect their financial future.
A key point: IFRS S1 applies regardless of which accounting system a company follows (e.g., IFRS Accounting Standards, UK GAAP, or US GAAP).
What Must Companies Report Under IFRS S1?
Companies need to provide information in four main areas:
1. Governance: Who Oversees Sustainability in the Company?
Businesses must explain:
Who is responsible for making sustainability decisions (e.g., board members, managers).
How they monitor sustainability risks and opportunities.
Whether sustainability goals are linked to executive pay or bonuses.
2. Strategy: How Does Sustainability Affect the Business?
Companies must describe:
The sustainability risks and opportunities they face (e.g., climate change, pollution laws, resource shortages).
How these risks and opportunities affect their business plans, products, and financial health.
What steps they are taking to reduce risks and take advantage of sustainability opportunities.
For example:
A car company may explain how it is preparing for a future where petrol and diesel cars are banned.
A fashion company may explain how it is switching to eco-friendly materials and avoiding suppliers who use child labour.
3. Risk Management: How Does the Company Handle Sustainability Risks?
Companies must explain:
How they identify and assess risks related to sustainability.
What processes they use to monitor and reduce risks.
Whether they use data and forecasts to plan for the future.
For example:
A company might assess water scarcity risks if it depends on large amounts of water for production.
A retailer may check whether its suppliers follow fair working conditions.
4. Metrics & Targets: How is Sustainability Performance Measured?
Companies must:
Provide measurable data on sustainability performance (e.g., carbon emissions, energy use, water consumption).
Share progress towards sustainability targets (e.g., reducing waste by 50% in 5 years).
Explain how they calculate their sustainability data.
If a company sets goals (e.g., being carbon neutral by 2040), it must explain:
How it plans to achieve the goal.
What progress it has made so far.
Any challenges or delays in meeting the goal.
How Does IFRS S1 Help?
For Businesses:
✅ Helps them organise sustainability reporting properly.
✅ Builds trust with investors, customers, and regulators.
✅ Makes compliance with global reporting rules easier.
For Investors & Banks:
✅ Gives them clear, accurate information to assess financial risks.
✅ Helps them compare companies easily and make informed decisions.
✅ Encourages businesses to be more sustainable.
For Governments & the Public:
✅ Ensures companies report information honestly.
✅ Prevents greenwashing (when businesses make false sustainability claims).
✅ Helps regulators track corporate sustainability progress.
Common Questions About IFRS S1
1. Does IFRS S1 Only Cover Climate Change?
No. While climate change is a big focus, IFRS S1 covers all sustainability risks and opportunities, including:
Environmental issues (e.g., pollution, waste, biodiversity).
Social factors (e.g., fair pay, human rights, diversity).
Corporate governance (e.g., ethical business practices, transparency).
2. How is IFRS S1 Different from Other Sustainability Standards?
Many companies already follow standards like:
Global Reporting Initiative (GRI).
Task Force on Climate-related Financial Disclosures (TCFD).
Sustainability Accounting Standards Board (SASB).
The difference? IFRS S1 aims to be the global standard that connects sustainability reporting with financial reporting.
3. Is IFRS S1 Mandatory?
It depends on each country or stock exchange. Some regions may require companies to follow IFRS S1, while others may allow voluntary adoption.
Final Thoughts
Sustainability is no longer just an option – it is a key part of business success. Companies that fail to manage sustainability risks could lose money, investors, and customer trust.
IFRS S1 helps businesses report sustainability-related financial information properly, giving investors and regulators reliable insights.
By following IFRS S1, companies can:
✅ Show commitment to sustainability.
✅ Gain trust from investors and customers.
✅ Ensure long-term financial success.
As the world moves towards a greener and more ethical future, IFRS S1 ensures that businesses are transparent, accountable, and well-prepared for the challenges ahead.
Join us for our CPD on Sustainability Reporting S1 and S2 – 28 March 2025 here
🌱 Learn How to Report on Sustainability and Climate Impact – IFRS S1 & S2 Training 🌱
Sustainability reporting is becoming more important for businesses. Do you know how to properly report on climate risks and financial impacts?
Join us for a 3-hour live session on 28 March 2025, where Dr. Cornelie Crous, CA(SA) will explain the key rules of IFRS S1 and IFRS S2 in simple terms. You’ll learn:
✅ What companies need to share about sustainability and climate risks
✅ How to report greenhouse gas (GHG) emissions (Scope 1, 2 & 3)
✅ How governance, strategy, and risk management fit into sustainability reporting
✅ What investors and regulators expect from these reports
📅 Date: 28 March 2025
⏰ Time: 09:00 (3-hour session)
📍 Format: Live Event
🎓 CPD Units: 3 (Financial Reporting & Catalyst)
This session is perfect for finance professionals, accountants, and business leaders who want to stay ahead in sustainability reporting.
👉 Reserve your spot today! 🔗
