What You Need to Know Now.
If you’re new to climate reporting, here’s the reality:
- The Task Force on Climate-related Financial Disclosures (TCFD) is no longer the benchmark
It shaped the last decade-but it’s been replaced by a more rigorous global standard. - IFRS S2 is setting the new baseline
The International Sustainability Standards Board has moved climate disclosure from guidance to structured, comparable reporting expectations. - This is no longer a narrative exercise
You are expected to disclose decision-useful data—including emissions, targets, and industry-specific metrics. - What was optional is now expected
Transition plans, carbon credit reliance, and (where relevant) financed emissions are moving into core disclosure territory. - Your industry defines your requirements
IFRS S2 introduces mandatory industry-based metrics, eliminating generic, one-size-fits-all reporting. - Climate is now a financial issue
Disclosures must connect directly to risk, strategy, and financial performance—not sit in a separate ESG report. - Global regulations are aligning fast
From SB 253/261 to CSRD and CBAM, requirements are converging around the same core expectations. - If you’re still reporting only under TCFD, you likely have gaps
And those gaps are becoming visible—to regulators, customers, and capital providers.
What happened to the TCFD?
Climate disclosure is shifting from fragmented frameworks to a globally aligned baseline designed to deliver consistent, decision-useful information for investors and stakeholders. This shift is best illustrated by the transition away from the Task Force on Climate-related Financial Disclosures (TCFD), which for nearly a decade served as the foundation of corporate climate reporting.
In July 2023, the Financial Stability Board (FSB) announced that the TCFD’s work was complete, with the International Sustainability Standards Board (ISSB) Standards representing the culmination of the TCFD’s efforts. The TCFD formally disbanded in October 2023, and from 2024, the IFRS Foundation assumed responsibility for monitoring corporate climate-related disclosures worldwide.
This is not simply an administrative handover. It marks a shift from voluntary recommendations to standardized, regulator-ready disclosure requirements and it introduces obligations that go well beyond what the TCFD ever required.
If your company is still reporting solely under the TCFD framework, your disclosures may now be incomplete.
Are the TCFD recommendations still valid?
Yes. Companies can continue to use the TCFD recommendations as a reference, and some jurisdictions may still require them. However, the TCFD has disbanded, and the IFRS Foundation now monitors climate disclosure progress globally.
The IFRS Foundation confirms that IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures) fully incorporate the TCFD recommendations. Companies applying both standards meet the entire TCFD framework the four core pillars and eleven recommended disclosures are preserved:
- Governance — oversight of climate-related risks and opportunities
- Strategy — how climate affects business, strategy, and financial planning
- Risk Management — processes to identify, assess, and manage climate risks
- Metrics and Targets — performance data and GHG emissions targets
Applying IFRS S1 and IFRS S2 means companies automatically meet the TCFD recommendations. There is no need for dual reporting.
What are the 5 new IFRS S2 requirements beyond TCFD?
While IFRS S2 is consistent with the TCFD’s structure, the IFRS Foundation states that there are additional requirements in IFRS S2 that the TCFD never included. These additions transform climate reporting from a high-level framework into a granular, comparable, and auditable standard.
1. Industry-specific metrics are now mandatory
Under the TCFD, sector-specific guidance was provided but not mandatory. IFRS S2 changes this.
IFRS S2 requires companies to disclose industry-based metrics associated with their business model, activities, or common features of their industry. Companies must refer to and consider the applicability of the Industry-based Guidance on Implementing IFRS S2, a resource derived from the Sustainability Accounting Standards Board (SASB) Standards.
For example, a company in the real estate sector must consider the 18 industry-based disclosure topics outlined in the guidance. This requirement ensures that climate disclosures are sector-relevant and comparable across peers rather than generic checklists.
2. Carbon credit disclosure is required
Many companies set net greenhouse gas (GHG) emissions targets and use carbon credits to meet those commitments. The TCFD did not address this. IFRS S2 does — explicitly.
If a company plans to use carbon credits to achieve net emissions targets, IFRS S2 requires disclosure of the planned use of carbon credits, the extent of reliance on them to meet net targets, and confirmation that net targets do not obscure information about gross GHG emissions targets.
This prevents companies from presenting ambitious net-zero targets while heavily relying on offsets, a transparency requirement that investors and regulators increasingly demand.
3. Enhanced financed emissions detail
For financial institutions and companies with significant investment portfolios, financed emissions have long been a complex disclosure area. The TCFD addressed them at a high level. IFRS S2 goes further.
IFRS S2 requires additional information about financed emissions beyond the TCFD’s scope. This includes more granular disclosure of how financed emissions are calculated, scoped, and integrated into overall climate risk assessments.
The ISSB has also issued an Exposure Draft (April 2025) proposing targeted amendments to IFRS S2 to address practical challenges in disclosing financed emissions. In December 2025, the ISSB issued targeted amendments that clarify companies may limit measurement and disclosure of Scope 3 Category 15 GHG emissions to financed emissions as defined in IFRS S2, and that permit the use of classification systems other than the Global Industry Classification Standard (GICS) to disaggregate financed emissions information. These amendments are effective for reporting periods beginning on or after 1 January 2027.
4. Transition plans must be disclosed
Under the TCFD, companies were asked to describe their climate-related strategy. IFRS S2 elevates this to a required disclosure of transition plans.
IFRS S2 requires companies to disclose their transition plan toward a lower-carbon or climate-resilient economy, how they plan to achieve climate-related targets, how the latest international climate agreements inform their targets, and whether targets have been validated by a third party.
In June 2025, the IFRS Foundation published formal guidance on transition plan disclosures, building on material from the Transition Plan Taskforce (TPT), for which the IFRS Foundation took responsibility in 2024.
5. Granular GHG emissions breakdown
The TCFD recommended disclosure of Scope 1, Scope 2, and (where appropriate) Scope 3 GHG emissions. IFRS S2 maintains this but adds significant granularity.
IFRS S2 requires separate disclosure of Scope 1 and Scope 2 emissions for the consolidated accounting group and for associates, joint ventures, unconsolidated subsidiaries, and affiliates not included in the consolidated group.
Additionally, IFRS S2 requires more detailed disclosure of GHG emissions targets, including whether they are absolute or intensity targets and gross or net targets. The standard also requires disclosure of how international climate agreements informed targets and whether they have been third-party validated.
December 2025 ISSB amendments to IFRS S2
In December 2025, the ISSB issued targeted amendments to IFRS S2 in response to specific implementation challenges identified as companies began applying the standard. These amendments provide reliefs and clarifications while maintaining investor information needs. Key changes include:
- Clarification that companies may limit Scope 3 Category 15 GHG emissions measurement and disclosure to financed emissions as defined in IFRS S2
- Permission to use classification systems other than GICS for disaggregating financed emissions
- Clarification of the jurisdictional relief from using the GHG Protocol Corporate Accounting and Reporting Standard (2004) when only part of an entity is required to use a different measurement method
- A new jurisdictional relief from using global warming potential (GWP) values from the latest IPCC Assessment Report for converting GHG emissions
These amendments are effective for reporting periods beginning on or after 1 January 2027, with early application permitted.
Source: IFRS Foundation, National Standard-setters Newsletter, March 2026.
What is happening with IFRS S2 adoption in 2026?
The IFRS S2 framework is not sitting idle. As of early 2026, the pace of global adoption, implementation support, and standard refinement is accelerating significantly.
In February 2026, regulators from 33 jurisdictions convened for the first meeting of the ISSB’s expanded Jurisdictional Adopters Working Group —an expansion of the former Jurisdictional Working Group. The group facilitates multilateral discussions about the use of ISSB Standards, including addressing cross-border considerations that promote efficiencies and comparable information for capital markets and preparers.
Also in February 2026, the IFRS Foundation published a Jurisdictional Readiness Assessment Guide and associated tool, providing a structured, evidence-based review of market readiness for ISSB Standards. This helps jurisdictions decide on the pace, scope, and sequencing of regulatory actions and identify priorities for building capacity.
In March 2026, the ISSB released a webcast on climate resilience and climate-related scenario analysis requirements under IFRS S2. The webcast explains the proportionality mechanisms built into the standard that allow companies to choose a scenario analysis approach commensurate with their circumstances, an important clarification for mid-market companies concerned about the cost and complexity of scenario analysis.
The ISSB is also actively refining the supporting guidance. In February 2026, the ISSB discussed enhancements to the SASB Standards following a public consultation that closed in November 2025. This included proposed consequential amendments to the Industry-based Guidance on Implementing IFRS S2, the same guidance that companies must now refer to when identifying their mandatory industry-specific metrics.
Additionally, the IFRS Foundation launched a Regulatory Implementation Advisors Programme in early 2026, designed to support jurisdictional authorities as they introduce ISSB Standards into their regulatory frameworks. The programme enhances independent advisors’ familiarity with the standards and the Foundation’s implementation tools.
For companies still assessing their readiness, the signal is clear: IFRS S2 is being actively adopted, supported, and refined at a global scale. The window to prepare is narrowing.
When did IFRS S2 become effective?
IFRS S2 is effective for annual reporting periods beginning on or after 1 January 2024, with earlier application permitted if IFRS S1 is also applied.
How to start the transition from TCFD to IFRS S2
The IFRS Foundation has published a detailed comparison document showing how IFRS S2 aligns with and extends beyond the TCFD recommendations. The Foundation also offers a “Making the Transition from TCFD to ISSB” knowledge hub resource.
Key steps for companies:
- Audit current TCFD disclosures against the IFRS S2 comparison document to identify gaps
- Identify applicable industry-based metrics using the Industry-based Guidance on Implementing IFRS S2
- Assess carbon credit usage and prepare related disclosures if net emissions targets exist
- Review financed emissions data and determine if additional detail is required under the December 2025 amendments
- Develop or enhance transition plan disclosures, including alignment with international climate agreements and the IFRS Foundation’s June 2025 guidance
- Ensure GHG emissions are broken down by consolidated group and investments
TCFD vs. IFRS S2: comparison summary
| Requirement | TCFD | IFRS S2 |
| Industry-specific metrics | Guidance only | Mandatory disclosure |
| Carbon credit disclosure | Not addressed | Required |
| Financed emissions | Mentioned at high level | Enhanced detail required |
| Transition plans | Descriptive | Required disclosure with formal guidance |
| GHG emissions breakdown | Consolidated | Separate and granular |
| Monitoring body | TCFD (disbanded Oct 2023) | ISSB / IFRS Foundation (from 2024) |
Why this matters for your business
The consolidation of climate disclosure frameworks under the ISSB represents a global move toward standardized, comparable, and decision-useful sustainability information for investors. With 33 jurisdictions already coordinating adoption through the ISSB’s Jurisdictional Adopters Working Group, new implementation tools being published quarterly, and the SASB-based industry guidance being actively refined, companies that remain at the TCFD level risk falling behind — not in theory, but against peers who are already aligning.
For companies operating in or exporting to markets subject to California’s SB 253 and SB 261, the European Union’s Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS), or the Carbon Border Adjustment Mechanism (CBAM), IFRS S2 provides the global baseline that aligns with local requirements.
How Blue Sky Climate can help
Blue Sky Climate Reporting Services helps companies navigate the complex landscape of climate disclosure regulations, from California’s SB 253 and SB 261 to CBAM, CSRD, and the ISSB Standards.
Services supporting the transition from TCFD-aligned reporting to full IFRS S2 compliance include:
- GHG inventories — Scope 1, 2, and 3 emissions data collection aligned with the GHG Protocol and IFRS S2 requirements
- Industry-specific metric identification — applying SASB-based guidance to determine which metrics your sector must disclose
- Carbon credit and net target documentation — ensuring transparent disclosure of offset reliance and gross versus net target distinctions
- Transition plan development — structuring disclosure-ready transition plans aligned with IFRS S2 and the IFRS Foundation’s June 2025 guidance
- Financed emissions assessment — evaluating portfolio exposure and disclosure requirements under the December 2025 amendments
- Third-party assurance services — independent verification to strengthen credibility with investors and regulators
Companies in 33 jurisdictions are already aligning with IFRS S2. If you’re still at TCFD, the gap is widening — not shrinking. Let’s close it.
Book a free 30-minute consultation at blueskyclimate.com or contact hello@blueskyclimate.com.
Frequently asked questions (FAQ)
Is TCFD still valid for reporting?
Yes. Companies can continue to use TCFD recommendations, and some jurisdictions may still require them. However, the TCFD has disbanded, and the IFRS Foundation now monitors climate disclosure progress. Applying IFRS S1 and IFRS S2 fully meets the TCFD recommendations.
Do I need to report under both TCFD and IFRS S2?
No. Applying IFRS S1 and IFRS S2 means a company automatically meets all TCFD recommendations. There is no need for dual reporting.
What is the biggest gap between TCFD and IFRS S2?
The three most significant additions are mandatory industry-specific metrics derived from SASB Standards, carbon credit disclosure requirements for net emissions targets, and required transition plan disclosures with third-party validation details.
When did IFRS S2 become effective?
IFRS S2 is effective for annual reporting periods beginning on or after 1 January 2024, with earlier application permitted if IFRS S1 is also applied.
What changed in the December 2025 ISSB amendments to IFRS S2?
The ISSB issued targeted amendments clarifying Scope 3 Category 15 financed emissions measurement, permitting alternative industry classification systems for disaggregating financed emissions, and introducing jurisdictional reliefs for GHG measurement methodologies and global warming potential values. These amendments are effective for reporting periods beginning on or after 1 January 2027.
Where can I find the official IFRS S2 vs. TCFD comparison?
The IFRS Foundation published a direct comparison document at ifrs.org that maps every TCFD recommendation against IFRS S2 requirements.
How many jurisdictions are adopting IFRS S2?
As of February 2026, regulators from 33 jurisdictions participate in the ISSB’s Jurisdictional Adopters Working Group, coordinating adoption and addressing cross-border considerations. The IFRS Foundation has also published a Jurisdictional Readiness Assessment Guide and a Jurisdictional Rationale Guide to support additional jurisdictions planning their adoption roadmaps.
Does IFRS S2 require climate-related scenario analysis?
Yes. IFRS S2 requires companies to disclose information about their assessment of climate resilience and to use climate-related scenario analysis to inform that assessment. However, the standard includes proportionality mechanisms that allow companies to choose an approach commensurate with their circumstances. In March 2026, the ISSB released a webcast and factsheet explaining these requirements and the flexibility built into them.
Are the SASB Standards being updated to align with IFRS S2?
Yes. In February 2026, the ISSB discussed enhancements to the SASB Standards and proposed consequential amendments to the Industry-based Guidance on Implementing IFRS S2. The SASB-based industry guidance is the resource companies must refer to when identifying mandatory industry-specific metrics under IFRS S2.
