ESRS vs ISSB (IFRS S1 and S2): Scope, Materiality, Disclosures and Interoperability Compared

The European standards are delegated regulations adopted under Directive 2013/34/EU as amended by the CSRD, Directive (EU) 2022/2464. The duties that make them binding are set out where the Corporate Sustainability Reporting Directive (CSRD) is explained.

Two versions of the ESRS are compared here. The 2023 set is Annex I of Delegated Regulation (EU) 2023/2772 as amended by Delegated Regulation (EU) 2025/1416, used for financial years 2024 to 2026. The 2026 set is Annex I as replaced by Delegated Regulation (EU) 2026/1563, mandatory for financial years beginning on or after 1 January 2027 and optional for 2026. On the ISSB side, the page uses IFRS S1 and IFRS S2 as issued in June 2023 and the IFRS S2 amendments of December 2025.

The sections below cover the two bodies, who must apply each set, the two materiality tests, a disclosure map with a column for each ESRS version, the joint interoperability guidance of EFRAG and the IFRS Foundation, what the 2026 set changed, and one process that serves both.

ESRS and ISSB at a Glance

The two sets cover much of the same climate ground, but they come from different bodies, bind different companies and start from different materiality questions. The table sets ten points side by side as of 29 October 2026. The same questions for GRI, SFDR and UK SRS are answered where the ESRS and the other sustainability reporting frameworks compared sit together.

What the ISSB Is and What IFRS S1 and S2 Require

The International Sustainability Standards Board (ISSB) is the sustainability standard-setting board of the IFRS Foundation; its creation was announced at COP26, and it issued its first two standards, IFRS S1 and IFRS S2, in June 2023 (published 26 June 2023). Both standards are effective for annual reporting periods beginning on or after 1 January 2024 (IFRS S1 paragraph E1, IFRS S2 paragraph C1). An entity may apply IFRS S1 earlier only if it applies IFRS S2 at the same time. The ISSB page of the IFRS Foundation lists the board's standards and projects.

IFRS S1: The General Requirements

IFRS S1 requires material information about all sustainability-related risks and opportunities, judged from the side of primary users of general purpose financial reports. Under paragraph 18 of IFRS S1, information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that primary users of general purpose financial reports make. The disclosures sit within general purpose financial reports (paragraphs 60 to 63), and additional information placed there has to be identified (paragraph 62). They are reported at the same time and for the same period as the related financial statements (paragraph 64).

IFRS S1 also names its sources. An entity "shall refer to and consider" the applicability of the disclosure topics in the SASB Standards (paragraph 55(a)), and it may refer to the GRI Standards and the ESRS to the extent they assist and do not conflict (paragraph C2). Two transition reliefs apply. In its first annual reporting period an entity may disclose only climate-related risks and opportunities and must state that it uses this relief (paragraph E5); it then need not give climate comparatives in year one or comparatives for other topics in year two (paragraph E6).

IFRS S2: Climate and the December 2025 Amendments

IFRS S2 sets the climate disclosures, structured by governance, strategy, risk management, and metrics and targets, and it requires scenario analysis to assess climate resilience (paragraph 22). Greenhouse gas emissions are measured under the GHG Protocol Corporate Standard (2004) unless a jurisdictional authority or exchange requires another method (paragraph 29(a)(ii) of IFRS S2). In the first year an entity may keep a measurement method other than the GHG Protocol that it used in the prior period and need not disclose Scope 3 emissions, financed emissions included (paragraph C4).

The ISSB issued targeted amendments to IFRS S2 on 11 December 2025, effective for reporting periods beginning on or after 1 January 2027, with early application permitted. The four changes are listed below (paragraph C1B sets the effective date).

• Category 15: Scope 3 Category 15 disclosure may be limited to financed emissions.
• Classification systems: systems other than GICS are permitted for financed emissions.
• GHG Protocol relief: the jurisdictional relief applies where only part of the entity must use a different method.
• GWP values: a jurisdictional relief from the latest IPCC global warming potential values.

IFRS S1 and IFRS S2 fully incorporate the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

Who Must Apply Each Set

The ESRS bind a company because EU law says so, while IFRS S1 and S2 bind a company only where its jurisdiction or listing venue adopts them or where it chooses to use them. The two routes differ in kind: one is a legal duty with thresholds set in the Accounting Directive, the other is a standard that lawmakers and exchanges may take up.

The European Standards: A Legal Duty for Companies in Scope

Companies within the CSRD report under the ESRS, which are delegated regulations and apply directly without transposition. From financial years starting on or after 1 January 2027, a company or group reports if it exceeds both a net turnover of EUR 450 million and an average of 1,000 employees, on its own figures or on a consolidated basis (Articles 19a(1) and 29a(1) of Directive 2013/34/EU as replaced by Directive (EU) 2026/470). Directive (EU) 2026/470 binds the Member States, which transpose it by 19 March 2027; companies are bound by the national law.

Non-EU groups face a separate test under Article 40a(1) of Directive 2013/34/EU as amended by Article 2(13) of Directive (EU) 2026/470. It covers a Union net turnover of more than EUR 450 million in each of the last two consecutive financial years and an EU subsidiary or branch above EUR 200 million, for financial years starting on or after 1 January 2028. The test and the filing are set out for non-EU companies in scope of the Article 40a report.

IFRS S1 and S2: Adoption by Jurisdiction or Voluntary Use

The ISSB is a standard setter, not a legislator: whether a company must use IFRS S1 and S2 depends on its jurisdiction or the exchange it lists on. IFRS S2 itself refers to a "jurisdictional authority or exchange" that can require another emissions method (paragraph 29(a)(ii)).

EU law draws on the ISSB's work instead. Recital 43 of Directive (EU) 2022/2464 asks the standards to take account of GRI, SASB, IIRC, IASB, TCFD, CDSB and CDP and to integrate the content of the ISSB baseline standards to the extent consistent with the Union legal framework and the Green Deal. Article 29b(2) of Directive 2013/34/EU, as replaced by Directive (EU) 2026/470, asks the Commission to avoid a disproportionate burden, including by taking account of global standard-setting initiatives, and to prioritise quantitative information.

The United Kingdom shows the adoption route. As of 29 October 2026, the UK SRS S1 and S2, published on 25 February 2026 after a December 2024 recommendation to endorse IFRS S1 and S2 with minor amendments, are available for voluntary use. FCA rules apply them to in-scope listed issuers, on a comply-or-explain basis, for accounting periods starting on or after 1 January 2027, as set out under UK SRS built on IFRS S1 and S2.

Materiality: Impacts and Investors, or Investors Only

Under the ESRS a sustainability matter is material if it meets the impact criteria, the financial criteria or both (ESRS 1 paragraph 28, 2023 set), while IFRS S1 asks only whether information could reasonably be expected to influence the decisions of primary users of general purpose financial reports (paragraph 18). The ESRS test therefore asks two questions, impact and financial, and a matter passing either is material; IFRS S1 asks one. Neither ESRS version requires a materiality matrix to show the result.

The two lenses meet on the financial side, and the impact side is the part that an ISSB reporter adds when it also reports under the ESRS.

Where the Investor Lens Lines Up

The financial side of the ESRS test uses the same primary-user wording as IFRS S1, and the joint guidance calls the two definitions aligned (Section 1.1, citing ESRS 1 paragraph 48 of the 2023 set and IFRS S1 paragraph 18). The guidance draws a practical consequence from this alignment: an ESRS preparer is expected to identify the climate disclosures material under IFRS S2 from the outcome of its financial-materiality assessment, and an IFRS S2 preparer works the same way in reverse.

The paragraphs moved in the 2026 set. The definition of financial materiality is ESRS 1 paragraph 49 in the 2023 set and paragraph 47 in the 2026 set; the primary-users test is paragraph 48 in the 2023 set and paragraphs 23(a) and 45 in the 2026 set. EFRAG's Implementation Guidance 1 on materiality assessment (paragraphs 140 to 142, non-authoritative and written for the 2023 set) also states that the financial-materiality criteria of the ESRS and IFRS S1 are aligned.

What the Impact Lens Adds

The impact lens has no counterpart in IFRS S1: an entity reporting under the ESRS also reports actual or potential, positive or negative impacts on people or the environment over the short, medium and long term, in its own operations and value chain. The definition is ESRS 1 paragraph 43 in the 2023 set and paragraph 39 in the 2026 set. The audience is wider too: the 2023 set names affected stakeholders and users (paragraph 22), and the 2026 set lists business partners, social partners, civil society and NGOs among the users (paragraph 4). The joint guidance states the difference plainly: decision-usefulness under the ESRS considers investors and other stakeholders, under the ISSB standards investors.

The 2026 set adds a rule on information that is not material. Under ESRS 1 paragraph 24 of the 2026 set, the undertaking "shall not disclose" ESRS information that is not material, except supplementary information. The method for both sides is set out under the impact side of the double materiality assessment.

Disclosure by Disclosure: How the Requirements Map

The joint guidance maps the IFRS S2 disclosure requirements to the paragraphs of the 2023 set that cover them, so any map that a preparer uses from FY 2027 needs a second column for the 2026 set, where the climate standard has 11 disclosure requirements instead of 9. The 2023 set numbers its climate requirements E1-1 to E1-9, the 2026 set E1-1 to E1-11. The two tables below therefore carry a column for each version, and the third subsection lists what has no counterpart.

Cross-Cutting Requirements against IFRS S1

Governance, strategy, the impacts, risks and opportunities process and the policy, action, metric and target rules sit in ESRS 2 for every topic, while IFRS S1 carries the general rules and S2 repeats the four-part structure for climate. In the 2023 set, ESRS 2 holds BP-1, BP-2, GOV-1 to GOV-5, SBM-1 to SBM-3, IRO-1, IRO-2 and the minimum disclosure requirements (MDR, paragraphs 60 to 81). In the 2026 set, it holds GOV-1 to GOV-4 and the general disclosure requirements (GDR, paragraphs 38 to 52); the 2023 GOV-2 has no 2026 equivalent.

The guidance's Table 4.2.1 lists ESRS 2 governance items with no ISSB counterpart, among them the composition and diversity of governance bodies. Every ESRS 2 code in both versions is listed with its paragraphs among the cross-cutting disclosures of ESRS 2 in both sets.

Climate Requirements against IFRS S2

Most IFRS S2 requirements have a counterpart in the climate standard, but the counterpart moved in 2026: E1-6 on gross GHG emissions in the 2023 set is E1-8 in the 2026 set, and the resilience and scenario disclosures that sat in ESRS 2 SBM-3 and IRO-1 became E1-2 and E1-3. The table reads by IFRS S2 pillar, in the order governance, strategy, risk management, and metrics and targets.

Paragraph references in the second column are those of the joint guidance, which uses the 2023 set throughout. The two code columns follow the correspondence between Annex I of Delegated Regulation (EU) 2023/2772 and Annex I as replaced by Delegated Regulation (EU) 2026/1563.

Two codes carry a trap. E1-8 is internal carbon pricing in the 2023 set and gross GHG emissions in the 2026 set, and E1-9 is anticipated financial effects in the 2023 set and carbon credits in the 2026 set. Every disclosure requirement of both versions is listed for the climate standard E1 in the 2023 and 2026 sets.

Requirements with No Counterpart

Four requirements exist on one side only. On the ESRS side, the joint guidance finds no ISSB equivalent for energy consumption and mix (E1-5 in the 2023 set, E1-7 in the 2026 set; Table 4.2.2) and marks the composition and diversity of governance bodies in ESRS 2 paragraph 21(a), (b), (d) and (e) of the 2023 set as "NA" (Table 4.2.1). According to Section 4.2, the incremental ESRS items relate mainly to impacts and to mitigation performance.

On the ISSB side, two duties have no E1 counterpart. IFRS S2 paragraph 29(a)(vi)(2) and paragraphs B58 to B63 require financed emissions from entities in asset management, commercial banking or insurance; the guidance (Section 3.2) points ESRS preparers to ESRS 1 paragraph 131(b) of the 2023 set. IFRS S2 paragraphs 12, 23, 32 and 37 also oblige the entity to refer to and consider the Industry-based Guidance.

The ESRS-ISSB Interoperability Guidance

EFRAG and the IFRS Foundation published the ESRS-ISSB Standards Interoperability Guidance on 2 May 2024 as educational material that shows how an entity starting from either set can meet the climate requirements of both, and it is not a formal statement of equivalence. According to the guidance, the two sets of standards were developed "to achieve a high degree of alignment of the respective standards, with a specific focus on climate-related reporting", and "almost all the disclosures in ISSB Standards related to climate are included in ESRS".

The guidance refers to the paragraphs of Delegated Regulation (EU) 2023/2772 and states that future amendments to ESRS or ISSB Standards may change its analysis. It also says it cannot be relied on in isolation, read apart from the standards themselves. It works in two directions: Section 3 starts from the ESRS and lists what IFRS S2 adds, and Section 4 starts from IFRS S2 and lists what E1 adds.

Starting from the European Standards: What the ISSB Climate Standard Adds

An ESRS preparer that also wants IFRS S2 compliance has to perform climate-related scenario analysis to assess resilience, because IFRS S2 paragraph 22 requires it. The guidance puts it this way in Section 3.1(ii): both sets address scenario analysis, but under certain circumstances a difference may occur. In the 2026 set, the scenario disclosures of E1-2 apply if the undertaking uses climate-related scenario analysis (paragraph 17), and AR 6 says the undertaking may use such analysis.

Section 3.1 lists seven points to consider, and Section 3.2 adds financed emissions. The seven points are the assumptions and dependencies of the transition plan (IFRS S2 paragraph 14(a)(iv)); scenario analysis; industry-based metrics; the disaggregation of GHG emissions; climate-related opportunities (IFRS S2 paragraph 29(d) against E1 paragraph 64(c)); capital deployment (paragraph 29(e)); and carbon credits (paragraph 36(e)). On disaggregation, IFRS S2 paragraph 29(a)(iv) splits the consolidated accounting group from other investees, while E1 paragraph 50 of the 2023 set splits the consolidated group from investees and joint arrangements under operational control, and "two different disaggregations would need to be provided".

Starting from IFRS S2: What the European Climate Standard Adds

An IFRS S2 preparer that also wants E1 compliance must add the emissions that paragraph 50(b) of E1 in the 2023 set covers, those of investees and joint arrangements under its operational control. The guidance lists this organisational boundary as the last of seven points in Section 4.1. The first point is scenario analysis, including a scenario consistent with the Paris Agreement, and the others are GHG disaggregation, carbon credits, a single amount or a range, physical and transition risks, and GHG reduction targets. Emissions measurement and its boundary rules are set out for Scope 1, 2 and 3 emissions under the European climate standard.

Section 4.1 sets out what E1 asks on four of these points. Carbon credits count only if "issued and verified according to recognised quality standards" and only from outside the value chain (E1 paragraph 56(b)), and they are not used to claim that a target was achieved (paragraph 34(b)). Reduction targets are gross, and an absolute target is required where an intensity target is disclosed (AR 23); an IFRS S2 net target needs a gross target too (paragraph 36(c)). IFRS S2 paragraph 17 permits a single amount or a range, which E1 allows only in AR 70(a), AR 73(a) and AR 74(a). Paragraphs 66(a) and 67(a) of E1 require gross amounts at risk before mitigation.

What Delegated Regulation (EU) 2026/1563 Changed for Interoperability

Delegated Regulation (EU) 2026/1563, which enters into force on 10 November 2026 and applies to financial years beginning on or after 1 January 2027 (optional for 2026), names interoperability with global sustainability reporting standards as one of its objectives (recital 2, point (vi)) and moves the scenario, resilience and GHG-split disclosures closer to the IFRS S2 structure. Delegated Regulation (EU) 2026/1563 replaces Annexes I and II of Delegated Regulation (EU) 2023/2772 and does not repeal it. Its recital 2 refers to "taking account, to the greatest extent possible, of interoperability with global sustainability reporting standards". The table lists the changes that matter for an IFRS S2 map.

The joint guidance still assumes sector-specific ESRS: it says that different considerations will apply once sector standards are issued (Section 3.1(iii)). Directive (EU) 2026/470 later deleted the empowerment to adopt sector-specific ESRS (Article 29b(1), third, fourth and sixth subparagraphs, of Directive 2013/34/EU). In its place, ESRS 1 AR 5 of the 2026 set lets an undertaking draw on IFRS industry-based guidance and the GRI Standards for entity-specific disclosures.

For financial year 2026, Article 2(1) of Delegated Regulation (EU) 2026/1563 lets an undertaking apply the 2023 set as amended by Delegated Regulation (EU) 2025/1416, the 2026 set, or the 2023 set with eight reliefs from the 2026 ESRS 1. Under Article 2(2), the statement says which version it applies, and that choice decides which code column of the climate table is used. The full list of changes is set out under what Delegated Regulation (EU) 2026/1563 changes.

One Reporting Process for Both

One process can serve both sets if it starts from the ESRS materiality assessment, keeps its financial outcome as the bridge to IFRS S1 and S2, and adds the items each set alone requires. The seven steps below follow the order of this page.

1. Fix the ESRS version for the financial year and record it in the statement (Article 2(2) of Delegated Regulation (EU) 2026/1563).
2. Run the materiality assessment once and keep its financial outcome as the list of IFRS S2-material climate topics.
3. Map each IFRS S2 paragraph to the ESRS code of the version applied, using the cross-cutting and climate tables above.
4. Add the ISSB-only items: mandatory scenario analysis, industry-based metrics, the IFRS S2 disaggregation and, for asset management, commercial banking or insurance, financed emissions.
5. Add the ESRS-only items: the paragraph 50(b) boundary, the carbon-credit conditions, gross targets and amounts, energy, and the governance composition data.
6. Check every relief against both sets, since the guidance (Section 1.4) asks preparers to confirm that a relief is available under each.
7. Align location and timing with the management report, and state how far the Scope 3 inputs are verified, which the guidance suggests (Table 2.1, footnote 9) because ESRS statements are subject to mandatory assurance.

The steps from scope to assurance are set out in our CSRD compliance after the Omnibus plan.

Reliefs, Effective Dates and Open Consultations

Both sets change for periods beginning on or after 1 January 2027, and each set has its own reliefs. On the ISSB side, the climate-only relief of IFRS S1 (paragraphs E5 and E6) and the Scope 3 relief of IFRS S2 (paragraph C4) cover the first year. The 2026 set has no Scope 3 phase-in (ESRS 1 paragraphs 121 to 127). For anticipated financial effects, wave-one undertakings may omit all such information for financial years before 2028 and the quantitative part before 2030, and other undertakings for their first two and first four financial years, with exceptions set out in those paragraphs. Under the 2023 set, undertakings with up to 750 employees may omit Scope 3 and total GHG emissions in their first year, and Delegated Regulation (EU) 2025/1416 gives wave-one undertakings of that size three years.

The ISSB is also consulting on nature. ISSB Exposure Draft ED 2026/1 on nature-related disclosures, published 22 October 2026, comments due by 19 February 2027, proposes a practice statement: entities would not need to comply with it to assert compliance with ISSB Standards (IFRS Foundation announcement). The IFRS S2 amendments of December 2025 are already issued. Each ESRS relief with its population and years is listed among the phase-in reliefs of the ESRS.

ESRS and ISSB Questions

Five questions recur when the two sets are compared.

Can one report meet both sets of climate requirements?

Yes, for climate, according to the joint guidance: "Regardless of whether it starts with ESRS or ISSB Standards, an entity can comply with the climate requirements of both sets of standards by following the content of this interoperability guidance." It is read with the standards, and its paragraph references are those of the 2023 set.

Does the interoperability guidance cover the 2026 standards?

No: it refers to the paragraphs of Delegated Regulation (EU) 2023/2772 and states that future amendments to ESRS or ISSB Standards may change its analysis. A preparer on the 2026 set maps the new codes with the climate table above, which gives both versions.

Is the TCFD still a separate framework?

IFRS S1 and IFRS S2 fully incorporate the TCFD recommendations, and the IFRS Foundation took over monitoring of climate-related disclosure progress from 2024 at the request of the Financial Stability Board (IFRS Foundation, July 2023). The joint guidance presents IFRS S2 under governance, strategy, risk management, and metrics and targets, the order of the climate table above.

Do the ISSB standards cover topics beyond climate?

IFRS S1 covers all sustainability-related risks and opportunities (paragraphs 3 and 17), but at the guidance's publication only climate had its own ISSB standard, and IFRS S1 lets an entity use the ESRS and the GRI Standards as sources for other topics (paragraphs 57 and C2). For the GRI side, see how the GRI Standards compare.

Must an ISSB reporter refer to the SASB Standards?

Yes: IFRS S1 paragraph 55(a) says an entity shall refer to and consider the applicability of the SASB disclosure topics, while the 2026 ESRS permit IFRS industry-based guidance, like the GRI Standards, only as an optional source for entity-specific disclosures (ESRS 1 AR 5).