IFRS S1 & S2: What Southeast Asia Companies Need to Understand 

IFRS S1 & S2: What Southeast Asia Companies Need to Understand 

Established by the International Financial Reporting Standards (IFRS) Foundation, the ISSB issued its inaugural IFRS Sustainability Disclosure Standards—IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures—in June 2023.  Together, these standards establish a high-quality, global baseline for investor-focused sustainability disclosures, marking a significant shift in how organisations communicate sustainability-related risks and opportunities.

Understanding IFRS S1 and IFRS S2

• IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information provides a set of disclosure requirements designed to enable companies to communicate to investors about the sustainability-related risks and opportunities they face over the short, medium and long term. The information should cover the four content elements set out in the TCFD recommendations, namely governance, strategy, risk management, and metrics & targets. In addition, industry-based information is required to be provided, referencing the SASB standard.
• IFRS S2 Climate-related Disclosures sets out specific climate-related disclosure requirements for a company to disclose information about its climate-related risks and opportunities. IFRS S2 builds on the requirements set out in IFRS S1 and fully integrates the TCFD recommendations. A company is required to disclose information relevant to these cross-industry metric categories:
  • scope 1, scope 2 and scope 3 greenhouse gases;
  • climate-related transition risks;
  • climate-related physical risks;
  • climate-related opportunities;
  • capital deployment towards climate-related risks and opportunities;
  • internal carbon prices that the company uses to assess the costs of its emissions; and
  • the portion of executive management remuneration linked to climate-related considerations.

At the core of both standards is a clear emphasis on financial materiality—how sustainability and climate-related factors impact enterprise value, and how future events may influence the amount, timing, and uncertainty of cash flows.

SEA Context

Across Southeast Asia, regulatory momentum is accelerating. Jurisdictions including Singapore, Malaysia, the Philippines, Indonesia and Thailand are progressing towards the adoption or alignment with IFRS S1 and S2. While implementation timelines and approaches vary, the overall direction is clear: greater consistency, transparency, and investor relevance in sustainability disclosures across the region.

Why Companies Should Act Now

1. Regulatory momentum is accelerating. Multiple ASEAN jurisdictions are introducing requirements between 2025 and 2027. Large companies are increasingly expected to align with IFRS S1 and S2, or local equivalents, as part of mandatory sustainability reporting frameworks.
2. Investor expectations are evolving. Investors and key stakeholders are seeking ISSB-aligned, decision-useful disclosures. Alignment not only enhances credibility but can also strengthen access to sustainable finance and support long-term valuation.
3. Data systems and controls take resources and time to establish: IFRS S2 requires data collection across Scope 3, scenario analysis and industry metrics. Data and governance readiness require time. Implementing IFRS S2 requires robust data systems, particularly for Scope 3 emissions, scenario analysis, and industry-based metrics. Establishing reliable processes and controls is resource-intensive and cannot be achieved overnight.

Conclusion & Practical Next Steps

IFRS S1 and S2 signal a clear shift towards financially material, decision-useful sustainability disclosures. For organisations in Southeast Asia, this is not just about compliance, but about building transparency, strengthening governance, and reinforcing investor confidence.

To move forward, organisations should:
- Conduct a gap assessment against existing frameworks (e.g. GRI, TCFD, SASB), with a focus on Scope 3 emissions, scenario analysis, and industry-specific disclosures
- Strengthen internal data systems, controls, and governance processes to support reliable reporting
- Work towards limited assurance of greenhouse gas inventories and sustainability disclosures to enhance credibility

Ultimately, IFRS S1 and S2 are redefining how sustainability is understood and managed at the enterprise level. Organisations that embed these requirements early will not only meet expectations, but lead in a more transparent, resilient, and value-driven future.

Annex: SEA Country Requirements You Need to Know

Malaysia — National Sustainability Reporting Framework (NSRF)

Singapore — mainly IFRS S2 (SGX)

Philippines — PFRS S1 & S2 (IFRS‑Aligned)

• Adoption model: SEC adopted PFRS S1 & S2 (local equivalents of IFRS S1 & S2) with a tiered rollout.
• Who & when: 

Tier 1: PLCs > PHP 50B Market Cap

• FY beginning on or after 1 January 2026, reporting in 2027.

Tier 2: PLCs more than PHP 3B up to PHP 50B

• FY beginning on or after 1 January 2027, reporting in 2028.

Tier 3: PLCs (below PHP 3B) and LNLs (w/ more than PHP 15B annual revenue for immediately preceding FY)

• FY beginning on or after 1 January 2028, reporting in 2029.

• External Assurance:

Mandatory limited assurance on Scope 1 and 2 GHG Emissions shall be required two (2) years after initial implementation of PFRS S1 and S2 for each tier.

Indonesia — SPK (PSPK 1 & 2) Effective 2027

• Adoption model: Indonesia’s Sustainability Disclosure Standards (SPK)—PSPK 1 (general) and PSPK 2 (climate)—are aligned with IFRS S1/S2 and effective 1 Jan 2027
• Status & support: SPK ratified 1 July 2025; launch backed by Bank Indonesia, Ministry of Finance, and OJK to build assurance readiness and regulatory alignment