IFRS S1: general requirements explained

What does IFRS S1 require?

IFRS S1 requires disclosure of information about sustainability-related risks and opportunities that is useful to the primary users of general purpose financial reports, mainly investors and lenders, in deciding whether to provide resources to the company. Risks and opportunities arise from the company's interactions with the people, the environment and the economy it depends on, across its value chain. Information is organised in the four areas taken from the TCFD: governance, strategy, risk management, and metrics and targets. See sustainability reporting explained. The ESRS also cover impacts; see impacts, risks and opportunities.

How are risks and opportunities identified under IFRS S1?

A company must refer to the SASB Standards, which set out disclosure topics and metrics for 77 industries, and consider whether they apply to it. It may also consider other sources, such as the CDSB Framework guidance, the most recent requirements of other standard-setters whose requirements are designed to meet investors' needs, and the practice of companies in the same industry, provided they do not conflict with IFRS S1. In practice, that lets a company use work done under the ESRS or GRI where it fits. See SASB standards and industry-based metrics and GRI and the ISSB.

What is material under IFRS S1?

Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that primary users make on the basis of the company's general purpose financial reports, which include its financial statements and sustainability-related financial disclosures. Materiality is company-specific and judged from the investor's point of view, so it is financial materiality, not the double materiality of the ESRS. A company need not disclose information that is not material, even if a standard lists it. See double materiality explained.

IFRS S1 in practice: a beverage company's first report

A listed beverage company in a country that requires IFRS S1 and S2 works through the process below.

For water, it discloses how the board oversees water risk, the plants affected, the share of production they represent, the water withdrawn and recycled, and its target to cut withdrawals. Connecting the information to the accounts, it explains that property, plant and equipment additions include 12 million of water recycling equipment, and that cost of sales includes 4 million of packaging levies, so readers can trace the same facts in both reports.

What are IFRS S1's general features?

The sustainability disclosures cover the same reporting entity as the financial statements and the same reporting period, and are published at the same time. Data and assumptions should be consistent with the financial statements as far as possible, and the links between them explained, which IFRS S1 calls connected information. Companies give comparative information, disclose the judgements and measurement uncertainty that most affect their disclosures, correct material errors from earlier periods, and make an explicit, unreserved statement of compliance. Information about a sustainability-related opportunity can be omitted if it is commercially sensitive and not yet public. See connected information, current and anticipated financial effects and climate risk in the financial statements.

What reliefs apply in the first year?

In its first annual reporting period, a company may report only on climate-related risks and opportunities, applying IFRS S1 just as far as it relates to them; if it does, it need not give comparatives for other topics in its second year. It need not give comparative information in the first year, and may publish its first sustainability disclosures with its next interim report rather than with its annual financial statements. IFRS S2's own reliefs, such as no scope 3 in the first year, also apply. See IFRS S2 climate disclosures. See ISSB transition reliefs.

Where does IFRS S1 apply?

IFRS S1 has been effective for annual periods beginning on or after 1 January 2024, but only where a country adopts it or a company chooses to apply it. By September 2026, the IFRS Foundation counted more than 45 jurisdictions using or moving to use the ISSB standards. Some, such as Australia, require only the climate standard for now; others adopt both standards, often phasing in by company size. The ISSB is also enhancing the SASB Standards industry by industry, which will change the topics companies consider under IFRS S1. See ISSB adoption by country.

This guide is general information. It is not tax or legal advice for your situation.