September 2025 – Where does the world stand on ISSB adoption?

How is the ISSB rolling out its standards?

The ISSB has made the implementation of the IFRS S1 and IFRS S2 standards its priority in 2025.

• IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information: Companies are required to disclose sustainability-related risks and opportunities.

• IFRS S2 Climate-related Disclosures: Companies are required to disclose specific metrics such as greenhouse gas (GHG) emissions, climate-related physical and transition risks and scenario analysis.

In recent months, the ISSB has proposed amendments to its standards to ease adoption. On Sept. 25, 2025, the board voted to approve amendments to its IFRS S2 climate-related disclosures standard following a comment period that ended on June 27, 2025. 

The amendments include removing some types of Scope 3 emissions from the reporting requirements; allowing commercial banks or insurers to use alternative industry-classification systems other than the Global Industry Classification Standard (GICS) in disclosing disaggregated financed emissions as required under current rules; allowing companies to use other ways of measuring GHG emissions than the GHG Protocol Corporate Standards if a company’s jurisdiction requires a different method; and granting financial institutions relief from measuring and disclosing Scope 3 emissions associated with derivatives, investment banking (facilitated emissions) and insurance and reinsurance underwriting.

The amendments will take effect as of Jan. 1, 2027, but companies may apply them earlier if they wish.

But the advisor also acknowledged that some of its draft amendments could also make it more difficult for companies using the two standards. For instance, some of EFRAG’s proposals include additional reliefs not provided for in the ISSB standards, EFRAG said. 

ISSB Chair Emmanuel Faber said during the ISSB’s September podcast that the board planned to discuss “further opportunities to improve interoperability” with the European Commission and EFRAG. 

“What the market is really looking for is true direct equivalence, what we call full direct interoperability,” he said. 

EFRAG said in its consultation that its proposed changes “provide an overall enhancement of the level of interoperability,” but acknowledged that more work would need to be undertaken with the ISSB “to further progress with this topic.”

How do the standards compare with standards in other jurisdictions apart from the EU? 

In the US, the Securities and Exchange Commission’s climate disclosure rules published in March 2024 appear unlikely to go into effect. In March 2025, then-Acting SEC Chairman Mark Uyeda said in a press release the SEC is stepping back from defending its climate disclosure rules in ongoing litigation against the rules, which had been paused shortly after they were finalized to allow legal challenges to proceed. Uyeda and Paul Atkins, who was sworn in as the new chairman of the SEC in April 2025, have both criticized the climate rules as an overreach of the SEC’s powers that creates unnecessary reporting burden on businesses.  

The rules have yet to be formally rescinded but remain stayed. The SEC told a US court on July 23, 2025, that it did not intend to review or defend the rules "at this time." The court put cases against the rule on hold on Sept. 12, 2025, and said it is the SEC's responsibility to determine whether the initial rules will be rescinded, repealed, modified or defended in litigation.

The rules require SEC-registered companies to disclose at least some material climate-related information, such as risk management practices and risks to their strategy or financial performance. Some larger companies are required to disclose Scope 1 and Scope 2 GHG emissions if the companies deem those emissions to be material. The SEC acknowledged at the time there were “similarities” between the ISSB standards and its final rules but said it would not recognize the ISSB standards as an alternative reporting regime for the time being.  

Predating the SEC rule, California approved a state law in October 2023 that would require large companies doing business in the state to begin reporting Scope 1 and Scope 2 emissions in an annual report starting in 2026, with Scope 3 reporting beginning in 2027. An amendment to the law signed in September 2024 gave the California Air Resources Board (CARB) more flexibility in developing the reporting rules companies will follow to comply with the law but did not change the compliance dates for emissions reporting. CARB on July 9 said that it would “exercise its enforcement discretion” in the first year of reporting to allow companies more time to prepare for the new rules, reiterating guidance from Dec. 5, 2024. Under a draft checklist published on Sept. 2, 2025, CARB said companies can use IFRS S2 as a framework for reporting climate disclosures.

What guidance is the IFRS giving on ISSB adoption?

Following the publication of the ISSB’s two draft amendments regarding the SASB industry-specific standards and industry-based guidance on implementing IFRS S2, the IFRS Foundation on July 10, 2025, published guidance on how companies should disclose industry-specific information when applying the two ISSB standards. The guidance underlines that while the standards require companies to disclose industry-specific information related to their sustainability-related risks and opportunities, they do not explain what industry-specific information companies should disclose. The guidance is designed to help companies assess the usefulness of their disclosures. It is expected to improve comparability between companies by reducing differences in the way they report, the IFRS Foundation said. Companies do not have to apply industry-based guidance to comply with IFRS S1 and IFRS S2, but using it can aid compliance, the IFRS said. 

In addition, the ISSB on Aug. 18, 2025, published guidance for companies on how to disclose anticipated financial impacts of sustainability-related risks and opportunities when applying the standards. The guidance explains how companies are expected to consider sustainability-related risks and opportunities in their financial planning, such as future investments in energy-efficient equipment. 

ISSB Vice Chair Sue Lloyd told the ISSB podcast that the board had decided to publish information about disclosing anticipated effects to help companies understand the requirements and why they are important for investors. She also underlined the importance for companies to use quantitative information when disclosing anticipated financial effects. Lloyd said the guidance was particularly timely given EFRAG’s consultation on the ESRS. Under the ESRS simplification proposals, companies would have the option to provide quantitative information on anticipated financial effects. 

That “would not only be a really significant difference in our mind from our requirements but also have an effect on the quality of information available for investors,” she said.

The ISSB acknowledged the challenging nature of reporting quantitative information in its guidance, saying it had included “additional proportionality mechanisms specific to anticipated financial effects” in its standards. 

When preparing such disclosures, companies only need to use “all reasonable and supportable information available at the reporting date without undue cost or effort and an approach commensurate with the skills, capabilities and resources available to the company,” the ISSB said.

How are regulators adapting the standards to their jurisdictions?  

Ultimately, the ISSB standards only take effect for corporate reporting if jurisdictions adopt them. The International Organization of Securities Commissions (IOSCO) endorsed the ISSB standards a month after their initial publication, signaling support for adoption in the 130 jurisdictions it represents. The organization launched a network at the end of 2024 to support its members in adopting the standards, starting with the 32 members of its Growth and Emerging Markets Committee.

Jurisdictions have taken different approaches to adopting and applying the standards, but there has been a general trend of countries aligning their standards with those of the ISSB following calls from investors for greater consistency.

The Philippines Securities and Exchange Commission on July 30 published its draft PFRS S1 and PFRS S2 standards, largely aligned with those of the ISSB. For example, companies would be permitted to disclose information on only climate-related risks and opportunities in the first year of reporting in accordance with IFRS S2. However, some differences remain. For example, according to the draft, companies would be allowed a two-year delay in reporting Scope 3 emissions, compared to one year under the ISSB. 

China is developing standards aligned with IFRS S1 and IFRS S2 and plans to establish a nationwide framework by 2030. It is also seeking to incorporate some adaptations for the Chinese market, including using national methods to measure carbon emissions. Its standards will include the concept of double materiality like the CSRD. 

The country’s Ministry of Finance issued a basic standard application on Nov. 20, 2024, and published guidelines on applying the standard on Sept. 3, 2025. The basic standard does not require Chinese companies to consider, or refer to, the SASB standards, the ISSB said in a jurisdictional snapshot of the Chinese standards.  

According to the Ministry of Finance guidelines, companies can use the standard voluntarily. The standard requires companies to disclose information about sustainability impacts; report on the resilience of their corporate strategies and business models to sustainability risks; and on the current and expected financial impact of sustainability risks and opportunities, among other things.

What future standards is the ISSB considering?

The board is continuing its research on risks and opportunities related to biodiversity, ecosystems and ecosystem services (BEES) as well as human capital. The research will include defining how macroeconomic drivers, impacts and dependencies, risks and opportunities, financially affect companies; identifying gaps between investor needs and current disclosures; prioritizing the most relevant topics; determining relevant risks and opportunities and whether they warrant cross-industry or industry-specific requirements. The board will also take into account stakeholder feedback on the SASB standards related to BEES and human capital. 

The ISSB is currently exploring how feasible it would be to set standards on those topics and said at its September 2025 meeting that it expects to decide on the direction it wishes to take in the second half of 2025. The board has previously said that its research findings would determine whether it needed to amend its existing standards, introduce new standards, provide fresh guidance or take no action. 

Part of the work on BEES will explore building on the recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD), which launched in June 2021 to guide  companies in disclosing their dependencies and impacts on nature. The board will assess what disclosures companies are providing and how much it costs them; how to apply IFRS S1 to nature-related disclosures; and whether investors’ needs are met by disclosures under the TNFD. 

The research project on BEES comes as the ISSB and TNFD are developing a closer relationship. On April 9, 2025, they announced a memorandum of understanding whereby they will share knowledge and expertise to develop the ISSB’s research on BEES and the nature-related aspects of the SASB standards.