Technical Commentary to ISSB Exposure Draft – Amendments to IFRS S2

About Eco Sustainability

Eco Sustainability is a regional sustainability consultancy headquartered in Singapore, with dedicated teams across Cambodia, Malaysia, Thailand, Indonesia, the Philippines, France, and the United States. We specialize in sustainability reporting and carbon accounting, carbon credits, green consulting and capacity building. Our services align with globally recognized frameworks, including the GHG Protocol, ISO 14064, and the ISSB’s IFRS S1 and S2 standards.

We are proud to support a growing network of clients - ranging from listed corporations to development agencies - in building credible ESG strategies. Our team includes certified GHG Lead Verifiers, ISSB trainers, and technical experts in climate finance and carbon markets.

Why We Are Responding to the ISSB Exposure Draft

As practitioners embedded in the region, we work at the intersection of international standards and on-the-ground implementation realities. We see firsthand the challenges and opportunities that emerging markets face in adopting robust, globally consistent sustainability disclosures. Our feedback reflects this dual perspective: upholding the integrity of IFRS S2 while ensuring its application remains practical, inclusive, and adaptable to varying levels of market maturity.

Eco Sustainability is committed to supporting the ISSB’s goal of achieving high-quality, comparable, and transparent climate-related disclosures worldwide. We welcome the opportunity to contribute to this consultation based on our technical expertise and regional insights.

To explore the full details of the ISSB’s proposed amendments to IFRS S2 and understand the broader implications for climate-related disclosures, visit the official exposure draft at ifrs.org.

Introduction

Eco Sustainability is pleased to submit our comments and recommendations in response to the ISSB Exposure Draft on proposed amendments to IFRS S2. As a regional sustainability consultancy headquartered in Singapore - with operations across Southeast Asia, France, and the United States - we are actively engaged in helping companies across emerging markets implement international sustainability standards.

We work directly with listed corporations, SMEs, and financial institutions to support their transition toward robust climate-related disclosures, in alignment with frameworks such as the GHG Protocol, ISO 14064, and the ISSB’s IFRS S1 and S2. Our team includes certified GHG Lead Verifiers, ISSB trainers, and practitioners deeply involved in capacity-building and carbon market development across ASEAN.

This submission reflects both our technical experience and our regional insights. In particular, we aim to highlight practical considerations for emerging markets and financial actors navigating complex Scope 3 disclosures, while reinforcing the importance of maintaining global consistency, transparency, and integrity.

We commend the ISSB for its continued efforts to develop high-quality and globally applicable sustainability standards. We hope our comments help strengthen IFRS S2’s implementation, especially in regions where readiness and data maturity are still evolving.

AUTHORED BY

Dr. Vincent Lim

Dr. Li Yuanzhe

Ho Shu Yah

Teng Ky-Gan

______________________________________________________________________________

Question 1—Measurement and disclosure of Scope 3 Category 15 greenhouse gas

Emissions

The ISSB proposes to permit entities to limit their disclosure of Scope 3 Category 15

greenhouse gas emissions. This limitation would permit entities to exclude some of their Scope 3 Category 15 greenhouse gas emissions, including those emissions associated with derivatives, facilitated emissions and insurance-associated emissions, when measuring and disclosing Scope 3 greenhouse gas emissions in accordance with paragraph 29(a)(i)(3) of IFRS S2.

(a) The ISSB proposes to add paragraph 29A(a), which would permit an entity to limit its

disclosure of Scope 3 Category 15 greenhouse gas emissions to financed emissions, as

defined in IFRS S2 (being those emissions attributed to loans and investments made by

an entity to an investee or counterparty). For the purposes of the limitation, the proposed

paragraph 29A(a) would expressly permit an entity to exclude greenhouse gas

emissions associated with derivatives. Consequently this paragraph would permit an

entity to exclude emissions associated with derivatives, facilitated emissions or

insurance-associated emissions from its disclosure of Scope 3 greenhouse gas

Emissions.

The proposed amendment would not prevent an entity from choosing to disclose greenhouse gas emissions associated with derivatives, facilitated emissions or insurance-associated emissions should it elect to do so.

Paragraphs BC7–BC24 of the Basis for Conclusions describe the reasons for the proposed

Amendment.

Do you agree with the proposed amendment? Why or why not?

o Broadly agree

o Broadly disagree

o Neither agree nor disagree

Optional: Please explain_____________________________________________________

Position: BROADLY DISAGREE

Eco Sustainability BROADLY DISAGREES with the proposed amendment to permit entities to exclude emissions associated with derivatives, facilitated emissions and insurance-related emissions from Scope 3 Category 15 disclosures. These exclusions risk introducing significant data gaps - particularly for financial institutions increasingly supporting carbon-intensive sectors through non-loan instruments.

Why This Matters

These emissions are material. In ASEAN, banks and insurers frequently underwrite or facilitate activities in high-emission sectors such as coal, petrochemicals, and palm oil. Excluding these categories could understate true climate risk exposure by 30–50%, undermining transparency, comparability, and completeness - core principles of the GHG Protocol and ISO 14064-1.

• Undermines comparability: Allowing selective omissions weakens cross-entity and cross-sector benchmarks. It enables entities to present partial emissions data, diminishing trust and reliability.

• Violates core reporting principles: The exclusions conflict with the principles of completeness, consistency and transparency under accepted carbon accounting frameworks and risk compromising verification efforts.

• Shifts responsibility: This approach moves climate accountability away from financial institutions toward investees, distorting the ownership of emissions and misrepresenting systemic financial risks.

• Disincentivizes progress: Permitting categorical omissions reduces pressure to improve estimation models, data-sharing, and collaboration with investees - particularly detrimental in emerging markets where data maturity is evolving.

ASEAN Context

Regional regulators are progressing toward fuller Scope 3 integration:

• Singapore (MAS, GFIT): Encourages PCAF use; Scope 3 is not mandatory but is gaining traction.

• Malaysia (JC3): Encourages transition risk analysis and Scope 3 tracking.

• Indonesia (OJK): Mandates ESG disclosures, with voluntary Scope 3 adoption by leading banks.

• Thailand (SEC): Requires Scope 3 reporting from 2025 onward.

Permitting broad exclusions may reverse this positive momentum, hindering regional alignment with global standards.

Recommendations

Eco Sustainability supports the ISSB’s effort to enhance global disclosure standards but urges a more balanced and robust approach:

1. Keep all Scope 3 Category 15 emissions in scope - including derivatives, facilitated emissions, and insurance.

2. Allow transitional relief through proxies, estimation ranges or qualitative disclosure where data is not yet available.

3. Require justification and future inclusion timelines for any temporary exclusions.

4. Align guidance with existing frameworks such as PCAF to assist entities, especially in emerging markets, in improving data quality and reporting capabilities.

This approach protects the integrity of IFRS S2 while enabling pragmatic, phased implementation globally.

(b) The ISSB also proposes to add paragraph 29A(b), which would require an entity that limits its disclosure of Scope 3 Category 15 greenhouse gas emissions in accordance with the proposed paragraph 29A(a), to provide information that enables users of general purpose financial reports to understand the magnitude of the derivatives and financial activities associated with the entity’s Scope 3 Category 15 greenhouse gas emissions that are excluded.

Therefore, the ISSB proposes to add:

• paragraph 29A(b)(i) which would require an entity that has excluded derivatives from its measurement and disclosure of Scope 3 Category 15 greenhouse gas emissions to disclose the amount of derivatives it excluded; and

• paragraph 29A(b)(ii) which would require an entity that has excluded any other financial activities from its measurement and disclosure of Scope 3 Category 15 greenhouse gas emissions to disclose the amount of other financial activities it excluded.

The term ‘derivatives’ is not defined in IFRS Sustainability Disclosure Standards, and the ISSB does not propose to define this term. As a result, an entity is required to apply judgement to determine what it treats as derivatives for the purposes of limiting its disclosure of Scope 3 Category 15 greenhouse gas emissions, in accordance with the proposed paragraph 29A(a).

The proposed paragraph 29A(b)(i) would require an entity that has excluded derivatives from its measurement and disclosure of Scope 3 Category 15 greenhouse gas emissions to explain the derivatives it excluded.

Paragraphs BC7–BC24 of the Basis for Conclusions describe the reasons for the proposed

disclosure requirements.

Do you agree with the proposed disclosure requirements? Why or why not?

o Broadly agree

o Broadly disagree

o Neither agree nor disagree

Optional: Please explain_____________________________________________________

Position: BROADLY AGREE

Eco Sustainability BROADLY AGREES with the ISSB’s effort to improve transparency through the proposed disclosure requirements in paragraph 29A(b). Requiring entities to disclose the amount and nature of financial activities excluded from Scope 3 Category 15 emissions helps deter greenwashing, improves accountability, and allows stakeholders to assess the magnitude of omitted exposures.

However, we believe the amendment, as drafted, leaves too much interpretive room and risks undermining the consistency and comparability of disclosures - particularly for financial institutions.

• Definition gap weakens comparability – Without a clear definition of “derivatives” or “other financial activities,” different entities may apply inconsistent interpretations, which complicates benchmarking and assurance.

• Disclosure without emissions is incomplete – Reporting only the financial value of excluded activities does not convey the emissions intensity or true climate risk of those exclusions.

• Risk of responsibility misalignment – Financial institutions may shift accountability for high-emission activities to downstream investees, misrepresenting actual risk ownership.

Our Recommendations

1. Clarify definitions – The ISSB should reference existing standards (e.g., IFRS, PCAF, ISO) to define “derivatives” and “other financial activities,” and issue illustrative guidance with typical examples (e.g., credit default swaps, carbon-linked options, reinsurance).

2. Require emissions estimates – Where possible, entities should disclose the estimated emissions associated with excluded financial activities, not just their financial value.

3. Support attribution frameworks – Encourage financial institutions to work with investees to delineate Scope 3 responsibilities through formal attribution agreements, avoiding duplication or omission.

4. Enable phased adoption – Provide a clear roadmap and transitional relief for emerging markets, supported by ISSB-aligned capacity-building.

This approach maintains the intent of the amendment while reinforcing the credibility and usefulness of disclosures, especially for users evaluating climate risk exposure in financial portfolios.

Question 2—Use of the Global Industry Classification Standard in applying specific

requirements related to financed emissions

Paragraphs 29(a)(vi)(2) and B62–B63 of IFRS S2 require entities with commercial banking or insurance activities to disclose additional information about their financed emissions. These entities are required to use the Global Industry Classification Standard (GICS) for classifying counterparties when disaggregating their financed emissions information in accordance with paragraphs B62(a)(i) and B63(a)(i) of IFRS S2.

(a) The ISSB proposes to amend the requirements in paragraphs B62(a)(i) and B63(a)(i)

of IFRS S2 and to add paragraphs B62A–B62B and B63A–B63B that would provide

relief to an entity from using GICS in some circumstances. Under the proposals, an

entity can use an alternative industry-classification system in some circumstances when

disaggregating financed emissions information disclosed in accordance with paragraphs

B62(a)–B62(b) and B63(a)–B63(b) of IFRS S2.

Paragraphs BC25–BC38 of the Basis for Conclusions describe the reasons for the

proposed amendment.

Do you agree with the proposed amendment? Why or why not?

o Broadly agree

o Broadly disagree

o Neither agree nor disagree

Optional: Please explain_____________________________________________________

Position: BROADLY AGREE

Eco Sustainability BROADLY AGREES with the proposed amendment to allow entities to use alternative industry classification systems, under limited circumstances, when disaggregating financed emissions in Scope 3 Category 15. However, we believe this flexibility must be tightly controlled to prevent misuse and protect data integrity.

Why This Matters

The Global Industry Classification Standard (GICS) is widely used, but it does not cover all counterparties - especially in emerging markets, where many entities are SMEs, unlisted companies or belong to nascent sectors. In these contexts, frameworks such as EEIO, ISIC, or local taxonomies may offer more accurate disaggregation. However, without guardrails, shifting classification systems could distort emissions baselines and reduce comparability.

Key Risks

• Baseline disruption - Switching classification systems midstream complicates year-over-year comparisons, decarbonization targets, and historical baselining.

• Coverage gaps - GICS may not fully represent counterparties in less formal or regionally distinct sectors, leading to classification mismatches.

• High uncertainty in spend-based models - Financed emissions estimates often rely on spend-based methodologies that are already uncertain; loosening classification standards without stronger data risks compounding this.

• Potential inconsistency - Without clear criteria, entities may select classification systems that present them more favorably, undermining trust and transparency.

Recommendations

To support flexibility without compromising integrity, we recommend:

1. Require disclosure and justificationEntities must clearly state which classification system is used, describe its structure, and explain why it provides a better emissions breakdown than GICS.

2. Provide mapping guidance (crosswalk tools)The ISSB should endorse reference tools to align GICS with other commonly used systems (e.g., ISIC, NAICS), helping reporters maintain consistency.

3. Require assurance or internal validationWhere alternatives are used, entities should demonstrate—through internal review or reasonable assurance—that data accuracy is not materially affected.

Flexibility is appropriate, especially in emerging markets or data-limited sectors, but must be bounded by strict transparency and validation safeguards. This ensures that financed emissions disclosures remain credible, comparable and meaningful across jurisdictions and industries.

(b) The ISSB also proposes to add paragraphs B62C and B63C to require an entity to disclose the industry-classification system used to disaggregate its financed emissions information and, if the entity does not use GICS, to explain the basis for its industry-classification system selection.

Paragraphs BC25–BC38 of the Basis for Conclusions describe the reasons for the proposed disclosure requirements.

Do you agree with the proposed disclosure requirements? Why or why not?

o Broadly agree

o Broadly disagree

o Neither agree nor disagree

Optional: Please explain_____________________________________________________

Position: BROADLY AGREE

Eco Sustainability BROADLY AGREES with the proposed disclosure requirements in paragraphs B62C and B63C. The proposal supports a practical balance between global consistency and local applicability, while enhancing the credibility of financed emissions reporting.

Why this matters

GICS remains the globally preferred system due to its widespread investor recognition and comparability. However, in some jurisdictions, particularly in emerging markets, entities may rely on local classification systems due to regulatory mandates, data availability, or SME-heavy portfolios. In such cases, transparency is essential to avoid greenwashing and ensure stakeholder trust.

We support the requirement that entities:

• Explicitly disclose the name and structure of the classification system used.

• Explain the rationale for selecting an alternative system over GICS.

• Describe how the classification system differs from GICS, particularly in terms of sector hierarchy, boundaries, and coverage.

We recommend:

• Requiring disclosure of the system’s scope, level of detail, and asset applicability.

• Encouraging the development of mapping tools or crosswalks to help users compare across systems.

• Supporting third-party assurance by making classification logic traceable and reviewable.

This proposal promotes transparency without penalizing regional realities. It enables meaningful disclosure progress while maintaining consistency with the long-term goals of the ISSB.

Question 3—Jurisdictional relief from using the GHG Protocol Corporate Standard

The ISSB proposes to amend paragraphs 29(a)(ii) and B24 of IFRS S2 to clarify the scope of the jurisdictional relief available if an entity is required by a jurisdictional authority or an

exchange on which it is listed to use a method other than the Greenhouse Gas Protocol: A

Corporate Accounting and Reporting Standard (2004) to measure greenhouse gas emissions for a part of the entity. The amendment would clarify that this relief, which permits an entity to use a different method for measuring greenhouse gas emissions, is available for the relevant part of the entity when such a jurisdictional or exchange requirement applies to an entity in whole or in part, for as long as that requirement is applicable.

Paragraphs BC39–BC43 of the Basis for Conclusions describe the reasons for the proposed amendment.

Do you agree with the proposed amendment? Why or why not?

o Broadly agree

o Broadly disagree

o Neither agree nor disagree

Optional: Please explain_____________________________________________________

Position: BROADLY DISAGREE

Eco Sustainability BROADLY DISAGREES with the proposed amendment to permit jurisdictional relief from the GHG Protocol, even when required by regulators or stock exchanges. While we understand the intention to support local compliance, such flexibility undermines consistency, comparability, and global alignment—the very aims of IFRS S2.

Why this matters

1. Fragmentation of MethodologiesAllowing entities to apply different GHG accounting methods across jurisdictions - each with unique definitions, emission factors, and GWP values - creates data fragmentation. This erodes comparability across time, companies and geographies, compromising the integrity of global benchmarks and baselines.

2. Violation of Core GHG Accounting PrinciplesThe GHG Protocol and ISO 14064 emphasize consistency, completeness and transparency. Jurisdictional relief risks violating these principles and complicates third-party verification, leading to lower assurance confidence.

3. Hindrance to Harmonization and InteroperabilityFor example, Singapore’s NEA framework differs significantly from the GHG Protocol in its treatment of boundaries and verification. Allowing mixed frameworks weakens regional harmonization and makes it harder to converge toward mutual recognition across regulatory regimes.

4. False Signals from Spend-Based EstimatesNon-standard methods may rely excessively on spend-based or financial proxies, which risk obscuring the real emissions footprint. This can create misleading performance indicators—for instance, rewarding spending cuts over actual decarbonization.

5. Technical Gaps in Jurisdictional MethodsHigh-quality GHG reporting requires technically grounded, activity-based methods - especially for Scope 3. Jurisdictional methods often lack this depth, resulting in emissions data detached from real-world operations and less useful for transition planning.

Recommendation

We recommend maintaining the GHG Protocol as the global default while:

• Requiring full disclosure and reconciliation when alternative methods are used, including how they differ from the GHG Protocol in boundaries, factors, and assumptions.

• Avoiding permanent exemptions—transitional relief may be provided, but with a clear path toward alignment.

• Encouraging capacity building and mapping tools to support jurisdictions in migrating toward harmonized standards.

While local realities must be acknowledged, jurisdictional relief risks compromising the very consistency and transparency ISSB aims to uphold. A global climate disclosure framework must remain grounded in shared principles—not diluted by localized exceptions.

Question 4—Applicability of jurisdictional relief for global warming potential values

The ISSB proposes to amend paragraphs B21–B22 of IFRS S2 to extend the jurisdictional relief in the Standard. The ISSB proposes that if an entity is required, in whole or in part, by a jurisdictional authority or exchange on which it is listed to use global warming potential (GWP) values other than the GWP values that are required by paragraphs B21–B22 of IFRS S2, the entity would be permitted to use the GWP values required by such a jurisdictional authority or an exchange for the relevant part of the entity, for as long as that requirement is applicable.

Paragraphs BC44–BC49 of the Basis for Conclusions describe the reasons for the proposed amendment.

Do you agree with the proposed amendment? Why or why not?

o Broadly agree

o Broadly disagree

o Neither agree nor disagree

Optional: Please explain_____________________________________________________

Position: BROADLY DISAGREE

Eco Sustainability BROADLY DISAGREES with the proposed amendment to allow jurisdictional relief for the use of global warming potential (GWP) values different from those specified in IFRS S2 B21–B22. While we understand the intent to accommodate local regulations, this amendment compromises comparability, scientific integrity, and the credibility of emissions disclosures.

Why this matters

1. Breaks Global ConsistencyAllowing multiple GWP datasets (e.g., AR4 vs. AR6) introduces significant discrepancies - especially for short-lived climate pollutants like methane - making emissions data incomparable across companies, industries, and jurisdictions.

2. Undermines Core Disclosure PrinciplesDeviation from a unified GWP standard weakens the consistency and transparency principles embedded in the GHG Protocol and ISO 14064, and increases the risk of verification non-conformities.

3. Dual Disclosure is a Superior AlternativeRather than allow jurisdictional substitution, entities should be required to:

4. Report emissions using the IFRS-aligned GWP (e.g., AR6), and

5. Where required, provide a secondary dataset using jurisdictionally mandated GWPs (e.g., AR4), along with a clear explanation of differences and rationale.

6. Aligns with Existing Market PracticeDual reporting is already used in multinational industries (e.g., semiconductors, tech) where companies operate under multiple emissions reporting schemes. It enhances clarity for investors, regulators, and verifiers without compromising compliance.

7. Supports Robust AssuranceHaving both datasets ensures third-party verifiers can evaluate data integrity across jurisdictions and confirm alignment with both local and international disclosure expectations.

Recommendation

We reject broad jurisdictional relief for GWP values. Instead, mandate dual disclosure where needed and provide guidance for explaining differences. This approach protects scientific rigor, enhances comparability, and upholds global trust in IFRS-aligned sustainability reporting.

Question 5—Effective date

The ISSB proposes to add paragraphs C1A–C1B which would specify the effective date of the amendments. The ISSB expects the amendments would make it easier for entities to apply IFRS S2 and would support entities in implementing the Standard. Consequently the ISSB proposes to set the effective date so that the amendments would be effective as early as possible and to permit early application.

Paragraphs BC50–BC51 of the Basis for Conclusions describe the reasons for the proposal.

Do you agree with the proposed approach for setting the effective date of the amendments and

permitting early application? Why or why not?

o Broadly agree

o Broadly disagree

o Neither agree nor disagree

Optional: Please explain_____________________________________________________

Position: BROADLY AGREE

Eco Sustainability BROADLY AGREES with the proposed approach to set the effective date of the amendments as early as possible and to permit early application. This approach allows more advanced entities and jurisdictions to proceed without delay, while creating space for real-world feedback and iterative improvement.

Why this matters

1. Supports Practical Implementation and Feedback. Early adoption enables regulators and standard-setters to collect valuable insights during real-world rollout. These learnings can inform future technical guidance, clarifications, and capacity-building support.

2. Acknowledges Diversity in Readiness. Given the wide variance in reporting maturity across sectors and jurisdictions, particularly in ASEAN, early application must be paired with strong transitional support. A recommended one-year buffer before mandatory compliance would provide the flexibility necessary for slower adopters to catch up.

3. Builds Resilience Amid Global Disruption. Recent global crises (e.g., COVID-19, Ukraine conflict) have disrupted supply chains and data systems. Early release allows companies to align internal structures, strengthen data systems, and prepare for future shocks through more resilient and standardized disclosure practices.

4. Accelerates Supply Chain Engagement and Strategic Alignment. Early effective dates give companies time to:

   1. Align internal teams and governance systems

   2. Communicate disclosure expectations to upstream/downstream partners

   3. Embed climate-related data into investment, procurement, and risk management processes

Recommendation

Proceed with an early effective date and permit early application, while ensuring that implementation is supported by robust guidance, training, and outreach - especially in emerging markets. This dual-track approach balances ambition with equity and readiness.

Response to Question 6: Other Comments

Eco Sustainability supports the ISSB’s efforts to create robust, globally comparable climate disclosures. However, as practitioners working across Asia Pacific and emerging markets, we caution that certain well-intentioned amendments may unintentionally weaken transparency and comparability - the very aims of IFRS S2. Drawing on both practical field experience and expert perspectives, we offer the following structured feedback through a “Human–Machine–Method–Legal–Environment” lens, to help ensure that IFRS S2 remains both implementable and impactful across diverse jurisdictions.

1. Human Resources and Expert Participation

• Broadening Access Beyond Financial Professionals: The disclosure and review process should not be exclusive to financial analysts. Technical experts, including those specialized in ISO 14064, ISO 14067, sustainability risk analysis (SRA), life cycle assessment, and sectoral emissions modeling, should be formally recognized as qualified participants in both disclosure development and review.

• Establishing Qualification and Renewal Mechanisms: Individuals involved in sustainability disclosure and verification should accumulate a minimum level of industry experience (e.g., projects completed, hours logged, or verified reports submitted). A renewable credential system could ensure ongoing competence and accountability, similar to schemes under ISO/IAF-accredited bodies.

2. Methodology and Technology Platforms

• Need for Integrated, Publicly Accessible Reporting Platform: ISSB or an aligned international body should explore establishing a centralized reporting platform that integrates GHG Protocol tools, emissions factors databases, and scenario modeling engines. This platform should allow:

  • Standardized data input

  • System-supported estimation methods (e.g., spend-based, activity-based)

  • Technical expert review modulesThis reduces subjectivity and risk, while enabling transparent and traceable emissions disclosures.

• Shared Responsibility for Method Risk: By incorporating technical experts in the platform validation process, the burden of estimation error and misclassification risks can be better distributed and controlled.

3. Audit Scope and Third-Party Oversight

• Inclusion of ISO-Compliant Third-Party Verification Bodies: The oversight process should not be limited to actors within the financial sector. ISSB should formally recognize ISO-accredited verification bodies and experienced auditors under ISO 14064-3, ISO 17029, and other sustainability assurance schemes.

• Encouraging Diversity and Maturity in Assurance Models: A more diverse pool of assurance providers enhances audit integrity and prevents excessive concentration of influence among a few “green finance” players. It also allows industry-specific auditors to address the technical nuances of emissions-intensive sectors more effectively.

4. Legal Positioning and Normative Hierarchy

• Clarify the Regulatory Status of S2 Disclosures: IFRS S2 and its methodological tools must evolve from simply being “good practices” or investor-marketing tools into part of a clear disclosure hierarchy, e.g.:

  • Best practice → Guidance → Code of Practice → Regulatory Requirements

• Preventing Greenwashing by High-Influence Actors: There is a growing risk that large market players will use S2-aligned disclosures as a tool for greenwashing or ESG marketing without robust verification or alignment with real decarbonization actions. ISSB must take steps to prevent this outcome by:

  • Requiring justification of assumptions

  • Imposing consistency checks across entities and years

  • Auditing supply chain and scope boundaries rigorously

5. Environmental System Perspective

• Reinforce the Connection Between Disclosure and Environmental Impact: Disclosure frameworks must not become an administrative exercise detached from real outcomes. S2 should be positioned as a bridge between emissions transparency and environmental improvement, actively guiding corporate behavior in reducing physical emissions across Scopes 1, 2, and 3.

• Early Alignment with Tax, Incentive, and Regulatory Systems: Where possible, ISSB should work with national authorities to align S2 disclosures with carbon pricing, border adjustment, and regulatory schemes, so that disclosures are linked to consequences, not just reports.

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