ISSB IFRS S2 Climate-Related Disclosures 2 — Questions and Answers
Question 1: Under IFRS S2, what does 'climate resilience' assessment require entities to disclose?
- The resilience of the entity's strategy and business model to climate-related changes, including under different climate scenarios (Correct answer)
- A guarantee that operations will continue uninterrupted under any climate scenario
- Only physical asset valuations adjusted for climate risk
- A transition plan approved by a third-party climate scientist
Correct answer: The resilience of the entity's strategy and business model to climate-related changes, including under different climate scenarios
IFRS S2 requires entities to assess and disclose how resilient their strategy is to climate scenarios, including those consistent with limiting warming to 1.5°C.
Question 2: Which industry-specific climate metrics does IFRS S2 require certain entities to disclose?
- Metrics from the SASB Standards for their respective industry, as referenced in IFRS S2 guidance (Correct answer)
- Metrics defined by national securities regulators for each jurisdiction
- Only metrics approved by the Big Four accounting firms
- Climate metrics are entirely voluntary beyond cross-industry requirements
Correct answer: Metrics from the SASB Standards for their respective industry, as referenced in IFRS S2 guidance
IFRS S2 guidance references SASB industry-specific metrics to supplement the cross-industry climate metrics required of all entities.
Question 3: Under IFRS S2, how must Scope 2 GHG emissions be measured and disclosed?
- Both location-based and market-based measurements are required (Correct answer)
- Only market-based measurement using energy attribute certificates
- Only location-based measurement using grid emission factors
- Either method is acceptable — entities choose one and disclose which
Correct answer: Both location-based and market-based measurements are required
IFRS S2 requires entities to disclose Scope 2 emissions using both location-based and market-based methodologies to allow full comparability.
Question 4: What climate scenario does IFRS S2 specifically reference as a scenario entities should consider?
- A scenario consistent with limiting global warming to 1.5°C above pre-industrial levels (Correct answer)
- A business-as-usual 4°C warming scenario only
- The median scenario from the entity's national government climate plan
- IPCC RCP 8.5 as the sole required scenario
Correct answer: A scenario consistent with limiting global warming to 1.5°C above pre-industrial levels
IFRS S2 requires consideration of a 1.5°C scenario, consistent with the Paris Agreement goals, as part of climate resilience assessment.
Question 5: Under IFRS S2, what must an entity disclose if it has a climate transition plan?
- The key assumptions, dependencies, and how the plan links to financial planning and capital allocation (Correct answer)
- Only the headline net-zero target date
- Transition plans need not be disclosed unless legally binding
- Only externally validated transition plans require disclosure
Correct answer: The key assumptions, dependencies, and how the plan links to financial planning and capital allocation
IFRS S2 requires detailed disclosure of transition plan assumptions, dependencies, and connection to financial strategy to prevent vague commitments.
Question 6: Under IFRS S2, which physical risk classification requires entities to consider impacts from extreme weather events?
- Acute physical risks (Correct answer)
- Chronic physical risks
- Transition physical risks
- Systemic physical risks
Correct answer: Acute physical risks
Acute physical risks relate to event-driven hazards such as hurricanes, floods, and wildfires that may become more frequent or severe due to climate change.
ISSB IFRS S2 Climate-Related Disclosures 2
Under IFRS S2, what does 'climate resilience' assessment require entities to disclose?