17/09/2026
Category
GRC (Governance, Risk, and Compliance)
ISSB standards are the template regulators across Asia are adopting for climate disclosure. IFRS S1 sets general sustainability disclosure requirements while IFRS S2 drills into climate, and jurisdictions from Singapore to Malaysia and Japan are localising them into listing rules on staggered timelines. This guide explains what S1 and S2 actually require, how they differ from TCFD, GRI, and SASB, and what data infrastructure a manufacturer needs before the first ISSB-aligned filing. —
If you are a CFO or CSO in a manufacturing, semiconductor, steel, or petrochemical business, you have likely noticed the sustainability reporting landscape shifting beneath your feet. New acronyms appear in board papers. Regulators issue consultation documents. Investors ask questions that did not exist five years ago. Among the most consequential developments in this space is the arrival of the International Sustainability Standards Board (ISSB) and its first two standards: IFRS S1 and IFRS S2. The ISSB was established by the IFRS Foundation in November 2021 at COP26 in Glasgow. Its mandate was clear: create a global baseline for sustainability-related financial disclosures that investors, lenders, and other capital market participants can rely on. Prior to the ISSB, sustainability reporting was a fragmented landscape. Companies could choose from multiple frameworks, apply them inconsistently, and produce reports that were difficult to compare across borders and industries. The ISSB was designed to address this fragmentation. In June 2023, the board published its inaugural standards:
The effective date for both standards is annual reporting periods beginning on or after 1 January 2024. However, it is important to understand that this baseline date applies to jurisdictions that have adopted the standards directly. In practice, most Asian markets are implementing ISSB-aligned requirements on a phased basis, which means the practical compliance deadline for your organisation depends on where you are listed and the scale of your operations. For manufacturing CFOs, the question is not whether ISSB standards will affect your business, but when and how thoroughly. The trajectory is clear. Singapore, Malaysia, and Thailand have each announced adoption roadmaps. Global customers and investors are already requesting ISSB-aligned data. The companies that prepare early will face a smoother transition, while those that delay will find themselves under pressure as deadlines approach. The good news is that ISSB standards do not require you to start from nothing. If your organisation already reports under frameworks such as the GHG Protocol, TCFD, or SASB, much of the underlying data and methodology is transferable. The ISSB represents an evolution in how sustainability information is structured and disclosed, not a complete reinvention of emissions accounting. Understanding what the standards require, and where your current data systems are sufficient or insufficient, is the first step towards confident compliance.
IFRS S1 is the broader of the two ISSB standards. It establishes the foundational requirements for disclosing sustainability-related financial information, regardless of the specific sustainability topic. Think of IFRS S1 as the architectural framework within which all other sustainability disclosures, including climate under IFRS S2, are situated. The standard requires companies to disclose information about sustainability-related risks and opportunities that could reasonably be expected to affect the entity’s cash flows, its access to finance, or its cost of capital over the short, medium, and long term. This is a deliberately investor-focused framing. The disclosures are intended to help capital providers make informed decisions about the allocation of resources. IFRS S1 is structured around four core pillars, which will be familiar to anyone who has worked with the TCFD framework:
The governance pillar requires companies to describe the governance processes, controls, and procedures they use to monitor and manage sustainability-related risks and opportunities. This includes identifying the body or individuals responsible for oversight, how they are informed about sustainability matters, and how they integrate these considerations into strategy and decision-making. For a manufacturing company, this might involve describing how the board’s risk committee oversees climate risk, how sustainability targets are incorporated into executive compensation, and how the company ensures that sustainability data receives the same level of scrutiny as financial data. The governance disclosures establish accountability and signal to investors that sustainability is not a peripheral concern but a board-level priority.
Under the strategy pillar, companies must describe the sustainability-related risks and opportunities they have identified, and explain how these affect their business model, financial performance, and financial position. This includes disclosing how the company’s strategy is resilient to sustainability-related risks, and whether the company plans to transition its business model in response. For a petrochemical company, strategy disclosures might cover transition risks associated with shifting demand patterns, physical risks from extreme weather events affecting production facilities, and opportunities in lower-carbon product lines. The standard encourages the use of scenario analysis to test the resilience of the company’s strategy under different climate pathways, such as a 1.5 degrees Celsius warming scenario.
The risk management pillar requires companies to explain their processes for identifying, assessing, prioritising, and monitoring sustainability-related risks. This includes describing how these processes are integrated into the company’s overall risk management framework. Many industrial organisations already have mature risk management processes. The ISSB standard asks companies to show how sustainability risks, particularly climate risks, are embedded within those existing processes rather than managed in a separate silo. This integration is important because it ensures that sustainability risks are assessed with the same rigour and using the same methodologies as other enterprise risks.
The metrics and targets pillar requires companies to disclose the metrics they use to monitor and manage sustainability-related risks and opportunities, as well as the targets they have set. The standard specifies that companies should use industry-based metrics where available, drawing on the SASB Standards that have been incorporated into the ISSB framework. For manufacturing businesses, this means reporting on GHG emissions across Scope 1, Scope 2, and Scope 3 categories, energy consumption, water use, waste generation, and other material metrics relevant to your industry. Targets should be quantitative where possible, time-bound, and accompanied by a clear baseline and methodology. One of the most important aspects of IFRS S1 is its emphasis on connected information. The standard requires that sustainability disclosures are presented alongside, and connected to, the corresponding financial statements. This means that the relationship between sustainability performance and financial outcomes must be made explicit. For a CFO, this is where the real strategic value of ISSB reporting becomes apparent: it creates a direct, auditable link between environmental performance and financial performance.
| Framework | Nature | Focus | Status |
|---|---|---|---|
| ISSB IFRS S1/S2 | Mandatory-ready standard | Investor-focused sustainability and climate disclosure | Being adopted as law across Asia |
| TCFD | Voluntary framework | Climate risk disclosure structure | Absorbed into IFRS S2 |
| GRI | Voluntary standard | Impact on economy, environment, people | Widely used for sustainability reports |
| SASB | Industry standards | Financially material industry metrics | Absorbed into ISSB reference library |
One of the most common questions we hear from CFOs and sustainability leaders is: how does ISSB relate to the frameworks we are already using? It is a reasonable question. After years of investing in TCFD-aligned disclosures, GRI reporting, or SASB standards, the last thing anyone wants is to start again from scratch. The practical answer is reassuring: ISSB does not replace everything that came before it. Instead, it builds on and consolidates existing frameworks into a more coherent structure. Understanding the relationship between these standards helps you identify what you can carry forward and what needs to change.
The relationship between ISSB and TCFD is the most straightforward. The ISSB absorbed the TCFD recommendations when it was established, and IFRS S2 explicitly incorporates the TCFD’s four-pillar structure: governance, strategy, risk management, and metrics and targets. If your company already produces TCFD-aligned climate disclosures, you have laid much of the groundwork for ISSB compliance. The key differences are in the level of specificity and the mandatory nature of the requirements. TCFD was a set of recommendations with voluntary adoption. ISSB is a formal standard with requirements that are being embedded into regulatory frameworks across the world. IFRS S2 adds more granular requirements around scenario analysis, Scope 3 emissions, and the connection between climate disclosures and financial statements. In practical terms, moving from TCFD to ISSB means deepening and formalising your existing climate disclosures rather than creating them anew.
The relationship between ISSB and GRI is complementary rather than overlapping, because they serve different primary audiences. ISSB is designed primarily for investors and capital markets. Its disclosures are focused on how sustainability risks and opportunities affect enterprise value, cash flows, and the cost of capital. GRI, by contrast, is designed for a broader range of stakeholders, including employees, communities, regulators, and civil society organisations. GRI reporting covers a wider range of sustainability topics, including social and governance issues that may not be financially material in the near term. In practice, many companies will continue to produce GRI-aligned reports for stakeholder engagement purposes while using ISSB-aligned disclosures for investor communications. The ISSB itself has acknowledged this complementarity and has developed interoperability guidance to help companies produce reports that satisfy both frameworks without excessive duplication. For a manufacturing company with operations in Indonesia or Thailand, this might mean using GRI standards for your comprehensive sustainability report covering community impact, labour practices, and environmental stewardship, while structuring your annual report disclosures according to ISSB requirements to meet the expectations of investors and regulators.
The SASB Standards have been fully incorporated into the ISSB framework. When the ISSB was established, it took over responsibility for the SASB Standards, which provide industry-specific metrics and guidance for sustainability disclosure. These industry metrics are now referenced in IFRS S1 as the primary source for industry-based disclosure topics. This integration is particularly relevant for manufacturing companies. SASB’s industry-specific standards for sectors such as chemicals, metals and mining, semiconductors, and machinery provide detailed guidance on the metrics that are most material to each industry. Under ISSB, these industry metrics become part of the required disclosure framework. If your company previously reported using SASB standards, the transition to ISSB is largely a matter of adopting the IFRS S1 and IFRS S2 structure while continuing to use the industry-specific metrics you are already familiar with. The content does not change dramatically; the reporting wrapper does.
To see how Evercomm helps industrial enterprises measure, reduce, and finance their transition to sustainable operations, visit https://evercomm.io.
IFRS S1 and IFRS S2 are the first two standards published by the International Sustainability Standards Board (ISSB). IFRS S1 sets out general requirements for disclosing sustainability-related financial information, while IFRS S2 focuses specifically on climate-related disclosures. Together, they establish a global baseline for sustainability reporting that is designed to be integrated with financial statements.
The ISSB standards took effect for annual reporting periods beginning on or after 1 January 2024. However, the effective date for mandatory compliance varies by jurisdiction. Singapore, Malaysia, and Thailand have each announced phased adoption timelines that begin between 2025 and 2027, depending on company size and listing status.
ISSB builds directly on the TCFD framework, incorporating its four-pillar structure of governance, strategy, risk management, and metrics. ISSB differs from GRI in its primary audience: ISSB is designed for investors and financial markets, while GRI has a broader multi-stakeholder focus. ISSB also absorbs the SASB industry-specific metrics, providing more detailed sector-level guidance than TCFD alone.
Manufacturing companies need Scope 1, Scope 2, and eventually Scope 3 GHG emissions data, climate risk assessments covering both physical and transition risks, governance structures overseeing climate strategy, scenario analysis results, and progress against emissions targets. The data must be auditable and connected to financial impacts on cash flows and enterprise value.
Carbon accounting platforms like NxMap automate the collection, processing, and reporting of emissions data in alignment with ISSB requirements. They apply GHG Protocol methodologies, maintain complete audit trails, and can generate reports structured to satisfy IFRS S1 and S2 disclosure requirements, reducing manual effort and improving data authenticity.
Singapore has adopted a phased approach. SGX-listed companies are required to apply ISSB-aligned climate reporting from their annual reports covering financial years beginning on or after 1 January 2025, with broader requirements rolling out through 2027. The Accounting and Corporate Regulatory Authority (ACRA) and MAS have aligned local requirements with the ISSB framework.
S1 requires governance, strategy, risk management, and metrics around sustainability-related risks and opportunities that affect enterprise value. S2 requires climate-specific disclosure: Scope 1 to 3 emissions under the GHG Protocol, climate scenario analysis, transition plans, and industry metrics drawn from SASB. Both demand data that traces to source when assurance arrives.
Timelines vary by jurisdiction: Singapore requires ISSB-aligned climate reporting for listed issuers from FY2025 with Scope 3 and assurance phasing in after, Taiwan and Japan are aligning on similar tracks, and Malaysia has published adoption roadmaps. Supply chain pressure arrives earlier than mandates, as global buyers extend ISSB-aligned data requests to suppliers.
ISSB targets investors and enterprise value, focusing on sustainability issues that affect cash flows and cost of capital. GRI targets broader stakeholders and reports the company’s impact on the world. Many companies run both: ISSB for the annual report and regulators, GRI for sustainability reporting to communities and customers.
Enforcement sits with each jurisdiction’s securities regulator, because ISSB standards become binding only when local law incorporates them. In Singapore that means SGX listing rules backed by MAS oversight; in Japan, the FSA; in Malaysia, Bursa. This means penalties, review practices, and assurance timing vary by market even though the disclosure content is standardised.
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