The IFRS Foundation has issued new guidance to enhance the quality and consistency of climate transition disclosures under its IFRS S2 Climate-related Disclosures, reinforcing global efforts to advance ESG and carbon neutral strategy reporting. The guidance aims to streamline fragmented transition-related disclosures, reducing complexity for both companies and investors while ensuring globally comparable information. 

“This guidance addresses the fragmentation of transition plan disclosures and supports consistent, high-quality information for investors,” said Sue Lloyd, Vice-Chair of the International Sustainability Standards Board (ISSB). 

Building on the UK’s Transition Plan Taskforce (TPT) framework, now incorporated into the IFRS Foundation, the document offers a practical framework for companies to report on both mitigation and adaptation strategies, while remaining fully aligned with the ISSB’s global baseline. The guidance clarifies how entities can disclose their alignment with climate-related targets, including those consistent with limiting global warming to 1.5°C—a key component of a robust carbon neutral strategy. 

Importantly, while IFRS S2 does not mandate that companies have transition plans, it does require disclosure of material climate-related risks and opportunities. The new guidance offers clear direction on: 

• Integrating transition plans with overall business strategy 

• Disclosing emission reduction targets and resilience measures 

• Allowing jurisdictions flexibility to add local disclosure requirements without obscuring core financial data 

The IFRS Foundation emphasized that this update does not alter IFRS S2 requirements but supports effective implementation. Global jurisdictions are encouraged to adopt the guidance to improve disclosure quality and comparability, helping investors evaluate companies’ ESG performance and climate readiness. 

As regulators and companies increasingly embed ESG and carbon neutral strategies into financial reporting, this guidance marks a key step toward transparent, investor-grade climate disclosure worldwide. 

Source : 

https://esgnews.com/ifrs-foundation-issues-new-guidance-on-climate-transition-plan-disclosures/