ISSB, IFRS and ESRS ADVISORY
ACCESS EXPERT
ISSB, IFRS, ESRS
CONSULTANTS.
ACCESS EXPERT
THE IMPORTANCE
OF VERIFICATION.
The 2025 IASB Management Commentary Practice Statement authorises ISSB-aligned sustainability disclosures in financial reports.
This unlocks a strategic reset for companies still treating sustainability as a silo or a separate report. Companies now have formal permission to embed ISSB-aligned sustainability disclosures directly within the management commentary section of the financial report.
Tell one integrated story:
✔ What drives your business model
✔ How climate, social, and nature risks impact future cash flows
✔ What you’re doing about it and why it matters to investors
Management commentary just became the home for connected, forward-looking insight, especially for those aligning to IFRS S1, IFRS S2, or ESRS standards. If you’re swamped with complex sustainability pressures and you’re seeking expert support and dedicated advisory team, ESG Pro is your perfect starting point.
Be a leader, and let’s make it happen—together.
ISSB IFRS S2
CLIMATE-RELATED
FINANCIAL DISCLOSURES.
Do Your Climate Transition Plans Demonstrate Financial Realism?
Finance teams must move beyond carbon metrics to ensure transition plans are credible and reflect real-world economic and geopolitical signals. Under IFRS S2, reporting teams should revisit scenario analyses to ensure assumptions reflect policy shifts and market realities. Climate risk disclosures must address how both physical and transition risks evolve under updated warming pathways. Assumptions and estimates should highlight dependencies on economic and regulatory stability.
Auditors must ensure scenarios reflect actual risk exposure, not just policy ambition, and that climate impacts are clearly tied to financial statements and strategic decisions. Consistency across disclosures, metrics, and reports is vital to avoid greenwashing. As climate risks intensify, finance and audit teams must consider physical and systemic risks with the same rigour as emissions targets.
THE 6 ISSB IFRS S2 DISCLOSURE PRINCIPLES
CLIMATE-RELATED
TRANSITION PLAN
Disclosure is mandatory.
Under IFRS S2, while having a transition plan is not mandatory, companies must disclose whether one exists and explain how climate-related risks and opportunities are integrated into their strategy and governance.
If a transition plan is in place, it should go beyond aspirational targets and demonstrate credible, actionable steps towards climate resilience.
TRANSITION PLAN
CREDIBILITY
Ensure all assumptions are supportable.
Your disclosures must outline clearly whether greenhouse gas targets are science-based and if carbon offsetting is used—along with the rationale behind it.
Assumptions about technology, policy, and market changes should be reasonable and supportable. You must explain how emissions targets are linked to capital expenditure, governance structures, and executive remuneration.
IDENTIFY LOGIC OF
RISK AND OPPORTUNITIES
Avoid overly optimistic projections.
Boilerplate statements or overly optimistic projections will fail assurance: regulators and stakeholders expect transparency grounded in current realities, not aspirational narratives.
Where no transition plan exists, disclosures must still explain how climate-related risks and opportunities are identified, assessed, and addressed within your governance framework.
PAY ATTENTION TO
PHYSICAL RISKS
Physical risks matter just as much as transition risks.
Some entities—especially those more exposed to extreme weather, supply chain disruption, or resource scarcity—may face material climate risks without a formal transition plan.
In such cases, clear and transparent disclosure is still required under IFRS S2. This clarification offers important guidance for reporting teams, risk owners, and auditors as they assess, prepare, and challenge climate-related disclosures to ensure alignment with evolving expectations.
CONSISTENCY IS
CRITICAL
Capital expenditure, operational planning, and remuneration.
Disclosures must be internally coherent and externally aligned—narrative statements, climate-related metrics, and financial reports should all tell the same story.
If climate ambitions are presented in sustainability disclosures, but capital expenditure, operational planning, or remuneration policies do not reflect these ambitions, stakeholders may question the integrity of the disclosure.
SCENARIO ANALYSIS
CONTEXT
Reflect the real-world context.
Use scenario analysis that accounts for sector-specific risks, geographic exposure, and evolving market and policy landscapes.
Generic or overly optimistic modelling is unlikely to satisfy assurance standards or stakeholder expectations. Assumptions should consider a range of warming trajectories, policy reversals, and physical impacts to prepare for more than just idealised pathways.
ISSB AND NET ZERO?
MITIGATE THE RISK!
Move Net Zero Commitments from Ambition to Accountability
Once a Net Zero target is embedded in external reporting—especially under ISSB or CSRD-aligned frameworks—it shifts from aspiration to obligation. It becomes a formal risk disclosure, and if unsupported or abandoned, a potential greenwashing liability.
As Unilever, Nestlé, and Amazon have discovered, audit and assurance reviews are exposing credibility gaps. Investor scrutiny is rising, and delivery must match disclosure.
If your 2030, 2035, or 2040 Net Zero pledge lacks a credible transition plan, robust data infrastructure, scope clarity across emissions, internal controls, and scenario planning—including physical risk—you must ask: can it withstand financial and regulatory scrutiny?
The smarter move is to shift the focus from headline targets to materiality and resilience:
- Integrate double materiality into strategy.
- Map your data and reporting capabilities before setting commitments.
- Assess operational and supply chain exposure to physical climate risks.
- Rebuild assumptions using today’s realities—not outdated or overly optimistic models.
It’s no longer about setting the most ambitious target. It’s about knowing what’s material, where you’re vulnerable, and what’s actually achievable.
EXPERTISE ON
ISSB, IFRS, ESRS
From comprehensive carbon accounting and Net Zero, through to climate change scenario risk modelling integrated with all major ESG frameworks, ESG Pro has the expertise.
Schedule a call with our team, and let’s explore what help you might require, and whether you are lookfor a gap analysis, short-term support, or even a fractional in-house expert.
SPEAK WITH OUR LEADERS
HUMPERDINCK JACKMAN
CHIEF EXECUTIVE OFFICER
hj@esgpro.co.uk
With an active role in supporting our clients, Humperdinck heads up our ESG and carbon consulting division, and he’s always available to get you started on your EcoVadis journey. He will introduce you to the perfect consultant for your sector and work with them to tailor a plan to match your exact needs. Read more
NATASHIA LEE
MANAGING DIRECTOR
nl@esgpro.co.uk
Also working actively with clients, Natashia knows all of the ESG frameworks too, and she also heads up our Social Value Sustainability Initiative as well as our supply chain assessment and ESG readiness services. In short, Natashia is a master at solving the most difficult scenarios. Read more
START TODAY
OR SCHEDULE A CALL.
The standards are here. It’s time to comply!
