The International Sustainability Standards Board's IFRS S2 Climate-related Disclosures standard became effective for annual reporting periods beginning on or after January 1, 2024. For many mid-market manufacturers, this is the first time a climate disclosure standard carries the same institutional weight as a financial reporting standard, with IFRS S2 designed explicitly to sit alongside IFRS S1 and the existing financial reporting standards that govern annual reports.
This piece is not about whether you are technically required to comply, which depends on your jurisdiction, listing status, and whether the standard has been adopted or mandated in your regulatory environment. This is about what the standard actually demands from your emissions data infrastructure, because the data requirements of IFRS S2 are substantial regardless of how you arrive at the decision to report.
What IFRS S2 requires: the emissions data obligations
IFRS S2 requires disclosure of climate-related risks and opportunities across four thematic areas: governance, strategy, risk management, and metrics and targets. The metrics and targets section is where the emissions data obligations sit.
Under the standard, companies are required to disclose absolute gross greenhouse gas emissions for Scope 1, Scope 2, and Scope 3. Each scope requires separate disclosure. Scope 2 requires disclosure under both the location-based and market-based methods when the two produce materially different figures. Scope 3 is required but the standard acknowledges the practical challenges and permits phased implementation in the first year for some entities.
The standard also requires disclosure of the greenhouse gases measured, the approach used (market-based or location-based for Scope 2), the emission factors applied, and the bases of measurement. This is the piece that catches many sustainability leads off guard: not just the number, but the documentation of how you arrived at it. Your auditor and any third-party verifier will want to trace the path from source data to disclosed figure.
The distinction between IFRS S2 and prior voluntary frameworks
TCFD, CDP, and the GHG Protocol have shaped the landscape of corporate climate disclosure for years before IFRS S2. Understanding how IFRS S2 relates to these frameworks matters for data preparation, because you may already have data in a format that partially satisfies the new standard.
IFRS S2 was built substantially on TCFD's four-pillar structure and endorses the GHG Protocol as the measurement methodology. If you have been reporting under TCFD-aligned frameworks, your governance and strategy disclosures are largely compatible. CDP respondents will recognize much of the structure.
The key difference with IFRS S2 is its integration into financial reporting. The standard expects climate disclosures to be prepared with the same level of rigor applied to financial statements. This means documented methodologies, consistent treatment across reporting periods, explicit disclosure of estimation uncertainty, and, for many entities, third-party assurance. Voluntary frameworks have historically accepted a wider range of disclosure quality. IFRS S2 does not.
Scope 1 and 2 data: what you should already have
For most manufacturers, Scope 1 (direct combustion from on-site fuel use) and Scope 2 (purchased electricity) are the most tractable categories. If you have energy management systems or utility bill archives, the underlying activity data exists. The question is whether it is organized in a form that supports a disclosed figure.
Scope 1 requires identifying every on-site combustion source: natural gas boilers, diesel generators, LPG process heating, company vehicles. For each source, you need fuel consumption in a physical unit (therms, liters, cubic meters) and the appropriate emission factor for that fuel. The IPCC AR6 emission factors are the recognized reference for this calculation.
Scope 2 requires electricity consumption across all facilities and the appropriate emission factor for each utility account. For a Singapore-based manufacturer, that is the national grid emission factor published by the Energy Market Authority. For facilities in other jurisdictions, it is the relevant national or regional grid factor. If you purchase renewable energy through certificates, the market-based calculation differs from the location-based calculation and both must be documented.
The data collection problem for Scope 1 and 2 is primarily an invoice and utility bill aggregation problem. The calculation is not complex. The difficulty is getting all the relevant documents into one place and extracting the activity data from them systematically.
Scope 3: the harder problem under IFRS S2
IFRS S2 requires Scope 3 disclosure. The standard does not require it to be calculated to the same precision as Scope 1 and 2 in the initial reporting periods, and it provides relief provisions for entities where Scope 3 data is not yet fully developed. But the direction is clear: Scope 3 is expected, and the relief provisions are transitional, not permanent.
For a mid-market manufacturer, the relevant Scope 3 categories are typically Category 1 (purchased goods and services), Category 4 (upstream transportation), Category 5 (waste generated in operations), and potentially Category 11 (use of sold products) depending on the product type. Category 1 is usually the largest.
Building a credible Scope 3 figure under IFRS S2 requires you to document which categories are material, which methodology you applied to each (spend-based, activity-based, or primary supplier data), and what the estimated uncertainty range is. You are not expected to have primary data from every supplier, but you are expected to have a defensible rationale for the approach you took and a plan for improving data quality over time.
The assurance question
IFRS S2, when adopted within regulated financial reporting contexts, generally implies external assurance on the climate disclosures alongside or shortly after the standard takes effect. The precise requirements for assurance depend on the jurisdiction and the specific regulatory adoption of the standard, but the general direction is toward limited or reasonable assurance over disclosed emissions figures.
What this means practically: your emissions data needs to be verifiable in the same way financial data is verifiable. An auditor should be able to trace your disclosed Scope 1 figure back to source invoices, through the calculation, to the final number. The same for Scope 2 and, with appropriate documentation of methodology and uncertainty, for Scope 3.
This is a higher bar than most companies have historically maintained for sustainability reporting. The data infrastructure you need is not just calculation software; it is an audit trail from source document to disclosed figure.
What to build now
Given the data requirements above, the practical preparation for IFRS S2 disclosure has a specific sequence. The first priority is establishing a complete and consistent baseline for Scope 1 and 2. This means identifying all combustion sources and utility accounts, collecting twelve months of activity data, applying consistent emission factors, and documenting the methodology for each source type. This work should be done for the same annual period that will be your first reporting period.
Scope 3 preparation starts with materiality assessment. Which Scope 3 categories are actually significant for your business? For a manufacturer, Category 1 purchased goods is almost always material. Upstream transportation may or may not be, depending on your supply chain. Work out which categories represent the majority of your estimated Scope 3 emissions before investing in data collection for every category.
Once you have identified the material categories, map them to your existing data sources. Category 1 can be estimated from your purchase order history. Category 4 can be estimated from freight invoices. In both cases, the relevant data already exists in your ERP or accounting system. The work is extraction and classification, not new data collection.
What IFRS S2 does not do
IFRS S2 does not prescribe the calculation methodology in detail. It endorses GHG Protocol as the recognized standard for emissions accounting, but does not specify which emission factor databases to use or how to handle measurement gaps. These are judgment calls that your sustainability lead and any external verifier will need to document and defend.
The standard also does not require you to be perfect in Year 1. It requires you to be systematic, transparent about your approach, and consistent from year to year once you have established your methodology. An honest Year 1 disclosure with documented estimation uncertainty and a clearly stated improvement plan is a more defensible position than a polished number with opaque methodology.
At Zevero, we approach IFRS S2 data preparation as an accounting infrastructure question. Your invoices and meter reads contain the source data. The task is organizing that data into a documented ledger that a third-party verifier can follow from beginning to end. The standard will hold you to that level of rigor; the preparation work should start well before your reporting period closes.