IFRS Foundation publishes guidance on disclosures about transition plans

The IFRS Foundation has today published a new guidance document Disclosing information about an entity’s climate-related transition, including information about transition plans, in accordance with IFRS S2 as part of its commitment to supporting the implementation of IFRS Sustainability Disclosure Standards (ISSB Standards). The document builds on disclosure-specific material developed by the Transition Plan Taskforce (TPT), for which the IFRS Foundation took responsibility in 2024.

The guidance:

• supports entities applying IFRS S2 Climate-related Disclosures;
• is designed to enable entities to provide high-quality information about their climate-related transition when applying IFRS S2; and
• covers disclosures about any ‘transition plan’ an entity has, including both mitigation and adaptation efforts.

Sue Lloyd, International Sustainability Standards Board (ISSB) Vice-Chair, said:

This guidance document addresses the fragmentation of disclosures about transition plans—which is costly for both preparers of information and investors—and provides inspiration for entities who are applying IFRS S2 when making disclosures about their climate-related transition plans. This guidance aims to help preparers determine what information is relevant to disclose regarding their strategy and goals related to their climate-related transition.

With insights gathered from several roundtables with stakeholders held earlier this year, ¹ this guidance builds on the TPT material, tailoring aspects to ensure global applicability. We have retained a focus on delivering full compatibility with the ISSB global baseline and disclosures about climate-related risks and opportunities affecting an entity’s prospects. We encourage jurisdictions adopting or otherwise using ISSB Standards to utilise this guidance document to support the provision of high-quality, comparable information about transition plans and other aspects of entities’ climate-related transition.

Requirements in IFRS S2

Although IFRS S2 does not require an entity to have a transition plan, it does require an entity to provide material information about the sustainability-related risks and opportunities that could reasonably be expected to affect its prospects. This includes information about its climate-related transition because it relates to how the entity mitigates and adapts to climate-related transition and physical risks.

This guidance document:

• explains that an entity’s climate-related transition is a process through which the entity, in the context of its overall strategy, pursues targets, undertakes actions or deploys resources to respond to climate-related risks and opportunities.
• explains to entities the information that it is necessary to disclose when applying IFRS S2, if the entity has set a strategy for its transition to a lower-carbon and/or climate-resilient economy (for example, reducing its greenhouse gas emissions and adjusting its business model to become more resilient to climate-related physical risks).
• sets out guidance on disclosures about entities’ climate-related transitions. The document complements materials provided by jurisdictions or others that set out requirements or recommendations to create transition plans and the content of such plans.

Implications for jurisdictions

This guidance is intended to be used by jurisdictions adopting or otherwise using ISSB Standards. Jurisdictions can, if they choose, supplement the disclosures required by IFRS S2 with requirements for further information aimed at meeting the needs of a broader group of stakeholders or to address specific jurisdictional information needs, to the extent that the sustainability-related financial disclosures are clearly identifiable and not obscured by additional information.

For example, a jurisdictional authority might require that entities operating in the jurisdiction disclose information on how their GHG targets will enable global warming to be limited to 1.5 degrees Celsius, in line with the latest international agreement on climate change.

Next steps

This guidance document does not add to or otherwise change the requirements in IFRS S2. The IFRS Foundation will continue to monitor disclosures provided by entities applying IFRS S2 and will consider the need to enhance the application guidance in IFRS S2. Any potential changes to IFRS S2 are subject to consultation following the IFRS Foundation’s due process.

¹ Earlier this year, stakeholder events were held to obtain information from stakeholders to inform the work to tailor the Transition Plan Taskforce (TPT) materials:

• February 2025 stakeholder event
• March 2025 stakeholder event