From TCFD to IFRS S2: strengthen your climate-related financial disclosures
Climate change poses range of impacts to organisations, not just through physical damage, but also from operational disruptions, climate induced value chain vulnerabilities and reduced efficiency across their resources, as well as market, reputational, and regulatory risks associated with delayed progress on your climate transition journey.
Climate-related financial disclosures have become essential for meeting the expectations of key stakeholders including investors, regulators, business partners, and customers. In response, many regulatory bodies across the world are proactively transitioning their corporate disclosure requirements from the Task Force on Climate-related Financial Disclosures (TCFD) framework to the newer International Financial Reporting Standards (IFRS) S2 reporting standard.
Thirty-six jurisdictions have adopted or otherwise used the IFRS Sustainability Disclosure Standards (ISSB Standards) or are in the process of finalising steps towards introducing them into their regulatory frameworks.
The transition from the TCFD to the IFRS S2 reporting standard represents a significant milestone in the evolution of global climate change and wider sustainability reporting frameworks and will allow stakeholders a more in-depth understanding of how climate-related risks and opportunities affect business performance, their value chains and long-term value generation capabilities.
However, companies will need to pivot their reporting to align with the new disclosure requirements. In this article we look at how these new standards emerged and the differences between them.
The evolution and integration of climate-related financial disclosures
An international framework developed by the Financial Stability Board (FSB) to help companies disclose climate-related risks and opportunities. It is built around four pillars: Governance, Strategy, Risk Management, and Metrics & Targets.
A global climate-related disclosure standard issued by the ISSB. IFRS S2 builds on the TCFD framework and requires companies to disclose how climate risks and opportunities affect their financial performance, position, strategy including risk management.
A body under the IFRS Foundation that develops comprehensive, global sustainability disclosure standards to ensure transparency and comparability in ESG reporting across markets.
A set of accounting and disclosure standards developed by the IFRS Foundation used in over 140 jurisdictions to promote consistent, transparent, and comparable financial reporting globally.
2015
The Financial Stability Board (FSB) created the TCFD back in 2015 to improve and increase reporting of climate-related financial information. Financial markets needed “clear, comprehensive and high-quality” information on the impacts of climate change. This includes the risks and opportunities presented by rising temperatures, climate-related policy, and emerging technologies in our changing world.
2022
The IFRS Foundation introduced a new board - the ISSB. The ISSB’s remit is to create global sustainability standards to improve the quality and consistency of sustainable disclosure worldwide.
2023
In July 2023, the Financial Stability Board (FSB) announced the completion of the TCFD’s mandate and the TCFD was formally disbanded in October 2023. ISSB released its two first standards: the IFRS S1 and IFRS S2.
IFRS S1 is the standard for general sustainability disclosures whereas IFRS S2 focuses specifically on climate-related disclosures and has the TCFD recommendations fully embedded, although it also introduces additional requirements.
The IFRS S2 is specifically designed to help companies provide transparent, consistent, and comparable information about their exposure to climate-related risks and opportunities in comparison to TCFD.
2024
In 2024, at the request of the FSB, the IFRS Foundation assumed responsibility for monitoring global progress on climate-related financial disclosures, a role previously held by the TCFD and this transition was timed to coincide with the global rollout of IFRS S1 and IFRS S2.
In November 2024, the IFRS Foundation published its first Progress on Corporate Climate-related Disclosures report, reflecting its new oversight role.
2025
ISSB accelerated its global harmonisation efforts in 2025, with significant developments spanning implementation support, standard enhancements, and expanding research initiatives. Most notably, in June, the ISSB released a proposed exposure draft to amend nine prioritised SASB Standards and introduce targeted changes to 41 others, aiming to improve consistency and relevance across industries. A 150-day comment period was set for public feedback. Additionally, the ISSB proposed consequential amendments to the IFRS S2 industry-based guidance to align with the updated SASB content, also allowing early application and setting an effective date 12–18 months post-issuance
UK Context
On 25th June 2025 the UK Government , released its exposure draft on the proposed UK Sustainability Reporting Standards : UK SRS S1 and UK SRS 2, where the UK SRS S2 primarily focuses on Climate-related reporting disclosure requirements and UK SRS S1 focuses on wider Sustainability-related Financial information disclosure requirements. Companies already reporting under TCFD or UK Climate-related Financial Disclosure Regulations will be well-positioned for the transition.
The consultation window is open until 17th September 2025, following this consultation process, the UK government will publish finalised versions of UK SRS S1 and UK SRS S2 for voluntary use later this year. Subsequently, the government and the Financial Conduct Authority (FCA) will consider whether to introduce requirements for certain UK entities to report against these standards.
How to transition your reporting from TCFD to IFRS S2
The incorporation of TCFD into the ISSB Standards helps streamline the global reporting landscape, making it easier to navigate and redressing the proliferation of overlapping disclosure frameworks often referred to as the ‘Alphabet Soup’.
The good news for companies already aligned to TCFD reporting is that IFRS S2 retains the TCFD’s four core recommendations and 11 disclosure recommendations. However, the new standard does introduce additional requirements including:
• transparency on industry-specific metrics
• the intended use and implementation of carbon credits as well as of internal carbon pricing in achieving net-zero targets
• more detailed reporting on financed emissions (finance sector entities only)
• enhanced scope 3 measurement framework and methodology disclosure
• specific guidance on when quantitative versus qualitative data is required
Whether your organisation is beginning to report on climate risk or is already aligned fully aligned with TCFD, it’s important to be aware of the expectations of IFRS S2 reporting and how these differ to previous disclosure expectations.
Our team have prepared a handy comparison table to highlight key differences across the disclosure requirements – download it using the form below.
Ricardo’s sustainability and climate change experts can support you in your transition from TCFD compliance to wider benefits of IFRS S2 reporting in preparation for future requirements including:
- A compliance readiness assessment to identify gaps in reporting.
- Identification of priority areas requiring immediate actions, quick wins as well as longer phased in recommendations.
- Conducting maturity assessment via peer benchmarking and industry comparisons including best practices.
- Assisting in understanding the leading disclosure practices with recommendations on improvement.
- Expert support to implement required actions.
Further information
- Get in touch with any questions or to find out more how we can support you with compliant and strategic climate risk reporting
- Download our guide to the key differences in preparing to transition from TCFD to IFRS S2 disclosure using the form below (note you may have to scroll down the page once the form is submitted)
- Find out more about our comprehensive ESG services
