The first wave of ISSB-aligned reports has landed, and it marks a turning point for corporate sustainability disclosure. In our recent webinar, First-Movers on IFRS S1 & S2: What Early Reports Are Telling Us, we drew on insights from newly released reports across six markets to examine what good implementation looks like in practice.
Adoption is only half the story. The harder question is how organisations are turning these standards into disclosures that are decision-useful, investor-oriented and genuinely reflective of their risks and opportunities. As early reports come in, the quality and maturity of disclosures vary widely.
That gap shows up in the challenges companies are wrestling with. When we asked our webinar audience, "What is your biggest challenge with IFRS S1 and S2 reporting right now?", more than 60% pointed to two issues: integrating S1 and S2 into existing processes, controls and systems, and quantifying climate risk impacts in financial terms. These are not purely technical hurdles. They reveal a wider gap between the ambition of the standards and the organisational readiness needed to deliver on them.
For boards and preparers, the question is no longer whether they are compliant. It is what good actually looks like under these standards.
As of April 2026, 24 jurisdictions have adopted IFRS S1 and S2 on either a voluntary or mandatory basis, with a further thirteen planning to follow. The global direction of travel is clear, even if the pace is uneven, with many markets layering local adaptations and transitional reliefs on top of the ISSB baseline.
In APAC, Singapore and Malaysia are taking a phased, climate-first approach. Singapore mandates Scope 1 and 2 reporting for all listed issuers from FY2025, with Scope 3 following for STI constituents from FY2026. Malaysia is applying phased implementation with transitional reliefs for more complex requirements. Hong Kong has moved further, issuing HKFRS S1 and S2 with climate requirements effective from January 2025 and tighter mandatory requirements for large issuers from 2026.
In the UK, finalised versions of UK SRS S1 and S2 are now available for voluntary use, with most large reporters still operating within a TCFD framework while preparing for mandatory adoption. Turkey has gone fully mandatory, with its Turkish Sustainability Reporting Standards effective from January 2024 for listed entities and financial institutions. Australia has issued ASRS S1 and S2, taking a climate-first approach with S2 mandatory and phased across three groups of reporters between FY2025 and FY2027.
To assess disclosure quality, we applied 8 themes as a lens across the reports we analysed:
Materiality and Interconnectivity. The strongest reporters go beyond a standard materiality matrix. Carlsberg Malaysia flags which topics are relevant to IFRS S1 and S2, while Swire uses an interconnectivity map to show how material matters influence one another. Standard Chartered conducts two separate materiality assessments and links climate risk directly to its IFRS 9 expected credit loss provision.
Value Chain and Impact Mapping. Leading reporters identify where risks and opportunities sit across the full value chain. ComfortDelGro maps climate impacts both upstream and downstream, while Sino Land uses bubble visualisations to show the relative size of impacts, helping readers quickly see where risks are most concentrated.
Physical and Transition Risk and Resilience Analysis. OCBC sets out a structured workflow for quantifying physical hazards, moving from asset geolocation through to financial impact estimation. CIMB links physical risk directly to portfolio metrics, quantifying how collateral values could shift under acute risk scenarios and connecting climate risk to potential credit risk.
Scenario Analysis and Time Horizons. Keppel DC REIT plots scenarios across both transition and physical risk dimensions, making the overall picture easier to read. Bursa Malaysia applies separate time horizons to climate and sustainability risks, recognising that climate effects often play out over longer periods than other business risks.
Current and Anticipated Financial Effects. CDL quantifies both current and anticipated financial effects over different time frames, integrating climate into financial planning rather than treating it as a separate narrative. Prudential takes a transparent approach by acknowledging it has chosen not to disclose a current quantitative assessment of physical risk impacts, setting out its reasoning rather than simply omitting the figures.
Risk Management Processes. Petroliam Gas Berhad has updated its climate risk assessment process to align with IFRS S2, embedding climate risks into its existing enterprise risk management framework. Garanti BBVA has developed a sector classification model to identify transition-sensitive sectors and estimate vulnerability levels based on regulatory and market changes tied to decarbonisation.
Governance, Skills and Remuneration. CIMB links remuneration directly to sustainability performance, with at least five percent of its scorecard weight assigned to IFRS S1 and S2-related KPIs. AIA stands out for making board climate capability explicit, setting out the specific skills and experience the board needs to oversee climate risks and opportunities.
Basis of Preparation and Use of Reliefs. The strongest first-year reporters set out clearly the standards applied, reporting boundary, key time horizons and transition reliefs used. Westpac is a strong example of transparent cross-jurisdictional disclosure, explaining in detail how it is navigating the nuances between AASB S2 and New Zealand Climate Standards as it works toward compliance with both.
4 observations stand out from our analysis:
For companies yet to publish their first-year report, the priority is to establish robust and supportable reporting foundations. For second-year reporters, the focus should shift to deepening climate risk and opportunity analysis, strengthening alignment with core strategy, and progressing Scope 3 readiness.
Across all markets, one principle holds: governance, controls and documentation need to be strong enough for disclosures to withstand assurance scrutiny as expectations from investors and regulators continue to rise.
The direction of travel is clear. The question now is how quickly companies can raise the quality of their reporting to match it.
About Black Sun
Black Sun Global is a stakeholder advisory and engagement agency that's been driving transformation and positive change for ambitious brands for more than 20 years. With deep expertise in disclosure and reporting, ESG, sustainability, and digital engagement, we reshape how organisations connect with customers, investors, employees, and the wider world.
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