IFRS S1 Explained
General requirements for sustainability-related financial disclosures
IFRS S1 is the foundation standard. It sets out what every company must disclose about sustainability-related risks and opportunities · and how those disclosures should be prepared.
Background
What is IFRS S1?
Published by the International Sustainability Standards Board (ISSB) in June 2023, IFRS S1 establishes general requirements for disclosing sustainability-related financial information. It is the umbrella standard that applies to all sustainability topics · climate, nature, social · while IFRS S2 drills into climate specifically.
IFRS S1 requires companies to disclose information that enables users of general purpose financial reports to understand an entity's exposure to sustainability-related risks and opportunities, and how those affect its cashflows, access to finance and cost of capital over short, medium and long-term horizons.
ISSB STANDARDS HIERARCHY
Who must comply?
Any entity that prepares general purpose financial statements and is required or elects to apply IFRS Accounting Standards. Jurisdictional mandates vary · check your local securities regulator.
Core Framework
The four disclosure pillars
Every IFRS S1 disclosure is structured around four interconnected areas, directly inherited from the ISSB IFRS S1 and S2 framework.
Pillar 1
Governance
Disclose the governance processes, controls and procedures your organisation uses to monitor, manage and oversee sustainability-related risks and opportunities.
Pillar 2
Strategy
Explain how sustainability-related risks and opportunities affect your business model, strategy and financial position · now and in the future.
Pillar 3
Risk Management
Describe the processes used to identify, assess, prioritise and monitor sustainability-related risks and opportunities, and how these integrate with overall risk management.
Pillar 4
Metrics & Targets
Disclose the metrics and targets used to measure and monitor sustainability-related risks and opportunities and your progress towards them.
Metrics & Targets
Cross-industry category metrics
IFRS S1 requires disclosure of six categories of cross-industry metrics regardless of sector. These are the baseline that every company must report · on top of any industry-specific metrics from SASB Standards.
The platform auto-calculates all six cross-industry category metrics from your input data, pre-formatted for disclosure.
GHG Emissions
Absolute Scope 1, 2 and 3 in CO2e; GHG intensity; biogenic CO2
Climate-related risks
Amount of assets or business activities exposed to transition and physical risks
Capital deployment
Capital expenditure aligned to climate-related opportunities
Remuneration
Percentage of executive remuneration linked to climate-related metrics
Internal carbon price
Price per tonne of CO2e used internally; scope applied
Climate transition plan
Proportion of Scope 1+2 covered by verified offsets or net-zero commitments
Disclosure Requirements
What companies must disclose
IFRS S1 is principles-based: it tells you what to disclose, not how to calculate it. Companies have flexibility in how they present information · but not in whether they present it if it is material.
Key Concepts
Terms you need to know
Sustainability-related financial information
Information about sustainability-related risks and opportunities that could reasonably be expected to affect the entity's cash flows, access to finance or cost of capital over short, medium or long-term horizons.
Materiality
Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that primary users of general purpose financial reports make.
Connected information
IFRS S1 requires disclosure to be connected to information in the financial statements and to other sustainability topics, creating a coherent picture of value creation.
Scenario analysis
A structured methodology for identifying risks and opportunities across plausible future states · mandatory for IFRS S2 physical and transition risk assessment.
Platform Capabilities
How Aretia handles IFRS S1
Every IFRS S1 requirement is mapped to a platform feature. Nothing falls through the cracks.
Get IFRS S1 compliant in weeks, not months
Aretia guides you through every disclosure requirement with structured templates, real data and built-in methodology documentation · or let our advisors do it with you.