IFRS S2 transition reliefs: what you can defer in year one, and where the deferral ends

The reliefs are the most useful thing in IFRS S1 and IFRS S2 for a first-time reporter, and the most frequently misdescribed. They are usually presented as a single year of breathing room. Three of them actually reach further than that, and one of them is missing from most summaries entirely.

There are five. Each is tied to a specific paragraph, and each applies to the first annual reporting period in which you apply the Standards.

The timing relief nobody mentions

Start with the one most summaries omit, because it changes your project plan more than any of the others.

IFRS S1 paragraph E4 permits an entity to publish its sustainability-related financial disclosures after the related general purpose financial statements, in the first annual reporting period in which it applies the Standards. If you take it, you report your first annual sustainability disclosures alongside your next interim general purpose financial report — that is, an interim report published during your second annual reporting period.

Ordinarily the two are published together. IFRS S1 paragraphs 60 to 62 require information prepared under the ISSB Standards to form part of the general purpose financial reports, clearly identified and not obscured, and paragraphs 64 to 68 deal with the timing and reporting period. The first-year relief loosens the timing, not the location.

Practically, this is the difference between a reporting deadline that collides with your year-end close and one that does not. It is worth checking against your jurisdiction's own filing rules before relying on it, because a local regulator can require the disclosures earlier than the Standard's relief would allow.

The climate-first relief, and the sentence at the end of it

IFRS S1 and IFRS S2 are applied together. Paragraph E5 of IFRS S1 permits a company, in the first annual reporting period in which it applies IFRS S1, to disclose information on only its climate-related risks and opportunities in accordance with IFRS S2, and to apply IFRS S1 only insofar as it relates to those disclosures.

That is the relief. The sentence people skip is the last one: if an entity uses the relief, it “shall disclose that fact”.

The ISSB set this out in its educational material on applying IFRS S1 when reporting only climate-related disclosures (January 2025), which quotes paragraph E5 and works through which IFRS S1 requirements still apply when you take the climate-first route.

They are more than most preparers expect. Materiality, aggregation and disaggregation, judgements, measurement uncertainty, errors, the statement of compliance and the conceptual foundations all continue to apply, read across to climate. As the material puts it, the relief narrows the scope of what you report on. It does not otherwise alter the requirements of IFRS S1.

Comparative information follows the climate-first election

This one is easy to miss because it sits in a footnote rather than a headline.

IFRS S1 paragraph E3, replicated at IFRS S2 paragraph C3, means comparative information is not required for any period before the date of initial application. In plain terms, no comparatives in the first annual reporting period. The comparative requirements apply from the second year.

Read that as a sequencing statement rather than a concession. Your first-year climate numbers become the comparatives in your second-year report. They will be read alongside a fresh set, by an assurance provider, with the benefit of a year's hindsight. A figure that was defensible only because nobody looked at it closely does not stay defensible.

Scope 3 in the first annual reporting period

IFRS S2 paragraph C4 permits an entity, in the first annual reporting period in which it applies the Standard, to use one or both of two reliefs. The second, C4(b), is that the entity is not required to disclose its Scope 3 greenhouse gas emissions.

The December 2025 Amendments to Greenhouse Gas Emissions Disclosures amended C4(b) so that it expressly covers the additional financed emissions information required of entities in asset management, commercial banking or insurance activities. If you are in one of those sectors, the first-year relief reaches the Category 15 information as well, which we cover separately in the December 2025 amendments.

It is worth being accurate about what this relief does and does not stop, because the usual summary — that it defers the disclosure but not the work — is not quite right. IFRS S2 paragraph C5 also permits an entity that took the Scope 3 relief to exclude comparative information on Scope 3 in its second year. The consequence, as KPMG’s ISSB disclosure checklist puts it, is that such entities are not required to collate information about Scope 3 emissions in the first year of reporting.

So as a matter of strict requirement, year one really can be a year without Scope 3 data. What that does not buy you is the second year, where current-year Scope 3 must be disclosed in full. Suppliers, landlords and counterparties are not on your reporting timetable and do not answer to your finance team, and the interval between deciding to collect value chain data and having it is routinely longer than the gap the relief leaves.

The measurement-method relief, and the disclosure it triggers

Paragraph 29(a)(ii) of IFRS S2 requires greenhouse gas emissions to be measured in accordance with the GHG Protocol Corporate Standard (2004), unless a jurisdictional authority or an exchange on which the entity is listed requires a different method.

Paragraph C4(a) adds a first-year relief: an entity may continue to use its existing measurement method — the methodology used in the annual reporting period immediately preceding the date of initial application — instead. The ISSB's educational material on greenhouse gas emissions disclosure requirements (May 2025) states this directly.

It comes with an obligation. Where emissions are disclosed using another method, whether under paragraph 29(a)(ii) or C4(a), the entity discloses the method and measurement approach it uses, and the reason or reasons for that choice.

So the relief is not a way of avoiding the question. It is a way of answering it in your own words for one year, in public, before switching. Which is a good reason to record the method against the figures now rather than reconstruct it later — the argument in could you reproduce this figure in eighteen months.

Proportionality is not a transition relief

Worth separating clearly, because the two get conflated in vendor decks and conference slides.

IFRS S1 contains a proportionality mechanism: the requirement to use reasonable and supportable information available at the reporting date without undue cost or effort, at paragraphs B6(b) and B8 to B10. The ISSB's climate-first material lists where it bites, including identifying climate-related risks and opportunities, disclosures about anticipated financial effects, scenario analysis, measuring Scope 3 emissions, and certain cross-industry metrics.

That mechanism does not expire. The transition reliefs do. Confusing the two produces the belief that Scope 3 stays optional for as long as it is hard, which is not what either provision says.

The second-year tail: IFRS S2 C5 and IFRS S1 E6

This is the part that gets lost, and it cuts both ways.

Three of the reliefs come with a matching comparative relief in the following year. IFRS S2 paragraph C5 covers two of them: an entity that took the Scope 3 relief may exclude Scope 3 comparatives in year two, and an entity that took the measurement-method relief may continue to use that method when presenting its first-year figures as comparatives in later periods. IFRS S1 paragraph E6 does the same for the climate-first relief, so comparative information on non-climate topics may also be excluded in the second year.

That is genuinely more generous than the standard summary suggests. It also has a sharp edge: nothing in the tail relieves the second year's own numbers. Year two requires current-year Scope 3, the full range of sustainability risks and opportunities rather than climate alone, and measurement under the GHG Protocol Corporate Standard unless a jurisdictional or exchange requirement applies to you.

The reliefs, in other words, are generous about the past and silent about the present. What you avoid is restating history. What you cannot avoid is having the capability in place when the second year closes.

There is one more second-year mechanic worth knowing. Where a company that previously applied IFRS S2 first applies the December 2025 amendments, paragraph C6 requires it to adjust comparative information for the preceding period unless it is impracticable to do so. Adjusting a comparative means going back into last year's working papers. Whether that is a morning or a fortnight is decided by what you retained.

How to use the reliefs without being trapped by them

Take them. They exist because the ISSB accepted that data availability and readiness are real constraints, and declining them out of ambition is not a virtue.

But take them with three things in place. Disclose the elections properly, in the terms the paragraphs require, rather than in a sentence at the back of the report. Start building the deferred capability on the year-one timetable — not because the Standard requires the data, but because supplier engagement, boundary decisions and factor selection have lead times that do not fit inside a single close. And retain the working papers behind the year-one figures, because your climate numbers become comparatives whatever else you elected, and comparatives get tested.

The position worth holding: the reliefs are a sequencing tool, not a year off, and the sequence has a hard edge at the end of year two. Reading them as permission to do nothing is defensible on the letter of the Standards and indefensible on the calendar, because the work they let you postpone takes longer than the postponement.

Common questions

What transition reliefs are available in the first year of IFRS S2?

Five. IFRS S1 paragraph E4 permits sustainability disclosures to be published after the related financial statements. IFRS S1 paragraph E5 permits climate-only reporting. IFRS S1 paragraph E3, replicated at IFRS S2 paragraph C3, removes the comparative information requirement. IFRS S2 paragraph C4(b) means Scope 3 emissions need not be disclosed. IFRS S2 paragraph C4(a) permits continued use of your existing greenhouse gas measurement method instead of the GHG Protocol Corporate Standard.

Do I have to say that I used a transition relief?

For the climate-first relief, yes explicitly: IFRS S1 paragraph E5 states that if an entity uses the relief, it shall disclose that fact. The measurement-method relief in IFRS S2 paragraph C4(a) also carries disclosure: where greenhouse gas emissions are measured by another method, the entity discloses the method and measurement approach used and the reasons for choosing it.

Can I still claim compliance with the ISSB Standards if I only report on climate?

Yes, in the first year. IFRS S1 paragraph 72 requires an explicit and unreserved statement of compliance once all requirements have been applied, and the ISSB has confirmed that electing the climate-first relief still allows a company to assert compliance in its first year of applying the Standards. A company reporting only climate-related information can do so only in that first year.

Does taking the Scope 3 relief mean I can wait a year before collecting Scope 3 data?

As a matter of strict requirement, largely yes: IFRS S2 paragraph C5 also permits an entity that took the Scope 3 relief to exclude comparative information on Scope 3 in its second year, so first-year Scope 3 data need not be collated. What is not relieved is the second year itself, where current-year Scope 3 must be disclosed in full. Since value chain data depends on suppliers and counterparties who are not on your timetable, the practical lead time is usually longer than the gap the relief leaves you.