IFRS S1 and S2: the financial-disclosure backbone of UK SRS

The standards

What IFRS S1 and S2 actually are

IFRS S1 and IFRS S2 were issued together by the International Sustainability Standards Board, part of the IFRS Foundation, in June 2023 IFRS Foundation.

They are the global baseline for sustainability-related financial disclosure — the same body that sets the accounting standards behind company financial statements now sets the standards behind their sustainability statements.

That lineage matters.

Both standards use single, financial materiality — they ask what a reasonable investor needs in order to assess a company's enterprise valueIFRS S1.

This is a narrower lens than the double materiality of the European Sustainability Reporting Standards, and it is the reason IFRS S1/S2 sit naturally inside the financial-reporting function rather than beside it.

IFRS S1 sets the general requirements: how to identify, measure and disclose sustainability-related risks and opportunities, anchored on relevance and faithful representation IFRS S1.

IFRS S2 then deals specifically with climate, and structures its disclosures around the four pillars — governance, strategy, risk management, and metrics and targets — that the Task Force on Climate-related Financial Disclosures established TCFD recommendations.

Endorsement

How UK SRS adopts IFRS S1 and S2

On 25 February 2026 the Department for Business and Trade published UK SRS S1 and UK SRS S2 — the UK-endorsed versions of the two ISSB standardsDBT, UK SRS S1 and S2.

The UK assessed the international standards and adopted them with only limited amendments, preserving international comparability while fitting the standards to UK law.

Publication of the standards is separate from the decision to require them.

That second step belongs to the Financial Conduct Authority for listed companies, and to the Government for the wider economy.

The FCA set out its proposed approach in consultation paper CP26/5 in January 2026 FCA CP26/5.

Under those proposals, UK SRS S2 would apply for financial years beginning on or after 1 January 2027 to roughly 500 listed companies — those in UK Listing Rules categories 6, 14, 15, 16 and 22 FCA CP26/5.

UK SRS S1, covering broader sustainability topics, is proposed on a comply-or-explain basis from 1 January 2029 FCA CP26/5.

The finance angle

Why this matters specifically for financial institutions

For most companies, the hard part of IFRS S2 is measuring their own emissions.

For banks, insurers and asset managers, the hard part is measuring everyone else's.

IFRS S2 requires disclosure of Scope 1, 2 and 3 greenhouse-gas emissions using the GHG Protocol Corporate Standard GHG Protocol, and for financial institutions the dominant figure sits in Scope 3.

IFRS S2 carries industry-based guidance, derived from the SASB Standards, that asks asset-management, commercial-banking and insurance activities to disclose their financed, facilitated and insurance-associated emissions IFRS S2 industry-based guidance.

These are the emissions of the companies a bank lends to, the assets a manager holds, and the activities an insurer underwrites — the portfolio, not the head office.

Recognising how demanding Scope 3 is, the FCA proposes one year of transitional relief: in-scope companies would report Scope 3 — including financed emissions — on a comply-or-explain basis a year after the rest of S2 takes effectFCA CP26/5.

That single deferral is the most consequential timing decision in the regime for finance-sector reporters.

The split

IFRS S1 versus S2 — what sits where

The two standards are designed to be read together but they do different jobs.

IFRS S1 is the general standard: it governs how a company reports any material sustainability risk or opportunity, and it sets the qualitative characteristics every disclosure must meetIFRS S1.

IFRS S2 is the only topic-specific standard issued so far, and it is entirely about climate IFRS S2.

In the UK's phased rollout S2 comes first and carries the mandatory weight; S1 follows on comply-or-explainFCA CP26/5.

For finance teams that means climate data and governance are the immediate build, with the broader S1 disclosures a second wave.

The per-standard detail lives on the IFRS S1 disclosure requirements and IFRS S2 climate disclosures pages, with a side-by-side on IFRS S1 vs S2.

Timing

The timeline a finance team should plan against

The standards exist now; the mandate is on a clear, if still-consultative, schedule.

UK SRS S1 and S2 were published in February 2026DBT.

The FCA's proposed first reporting year for S2 is the financial year beginning 1 January 2027, with first reports landing in 2028 FCA CP26/5.

Scope 3, including financed emissions, follows a year later on comply-or-explain, and the broader S1 disclosures are proposed from 1 January 2029FCA CP26/5.

Assurance is not yet mandatory: the FCA does not require third-party assurance in CP26/5, though companies that obtain it must disclose the provider, level and standard used — in the UK, that standard is ISSA (UK) 5000 FRC, ISSA (UK) 5000.

A finance-specific reading of the full schedule is on the UK SRS timeline for financial institutions page.