Guidance sharpens focus on transition plan comparability
Earlier this week, the IFRS Foundation released new guidance to support companies applying IFRS S2 Climate-related Disclosures, designed to bring more clarity and consistency to the disclosure of climate transition plans. The guidance is aimed at helping companies effectively report both mitigation and adaptation strategies, improving comparability and decision-usefulness for investors.
The new material builds on the work of the UK-led Transition Plan Taskforce (TPT), now under the IFRS Foundation’s remit. It draws from extensive stakeholder feedback gathered earlier this year and provides practical direction on how to disclose forward-looking climate strategies under IFRS S2. With increasing jurisdictional uptake of the ISSB Standards, the aim is to reduce fragmentation, avoid duplicative reporting, and ensure transition plans are decision-useful for investors.
Transition plans are becoming a critical tool in explaining how a company aligns its business with their own, and national commitments to reduce GHG emissions. “These are really strategic documents,” noted Mary Schapiro, Chair of the Climate Data Steering Committee. “To make investment allocations, stakeholders need to have the data in those plans.” She warned that fragmentation in the way plans are reported risks undermining comparability and trust. This new guidance should help ensure that data from transition plans is reported in the same, structured way across jurisdictions – who are welcome to build on those blocks with jurisdiction specific elements if needed.
At a time when over 80% of the world’s largest asset owners are embedding sustainability into their strategies, the need for reliable, comparable, and digitally accessible transition plan data has never been greater. This latest guidance is the next piece in the puzzle making that a reality.
Explore the IFRS Foundation’s guidance to see how climate transition reporting is evolving.
