---
title: IFRS S2
description: ISSB's IFRS S2 mandates Scope 1-3 climate disclosures, linking value chain carbon footprints and transition risks like CBAM to long-term financial resilience
---

[Glossary ](https://www.o2oh.com/glossary)

# [IFRS S2](https://www.o2oh.com/glossary/ifrs-s2)

 Written by [one to ONE Holdings](https://www.o2oh.com/glossary/author/one-to-one-holdings) | Feb 9, 2026 1:21:54 AM

IFRS S2, issued by the [ISSB](https://www.o2oh.com/glossary/issb), is a thematic standard focused on climate-related disclosures. It requires companies to report physical risks, such as extreme weather, and transition risks, such as carbon taxes or market changes. S2 also mandates disclosure of **[Scope 1](https://www.o2oh.com/glossary/scope-1), [2](https://www.o2oh.com/glossary/scope-2), and [3](https://www.o2oh.com/glossary/scope-3) [greenhouse gas](https://www.o2oh.com/glossary/ghg) emissions**.

These requirements promote transparency about a company’s [carbon footprint](https://www.o2oh.com/glossary/carbon-footprint) across the value chain, supporting informed investment decisions during the transition to net-zero.

## FAQ: Why is the relationship between IFRS S2 and Scope 3 emissions considered critical?

### Scope 3 is the primary driver of transition risks and financial resilience in the value chain.

**A:** IFRS S2 emphasizes transparency in climate-related financial risks. In [manufacturing](https://www.o2oh.com/glossary/manufacturing), most of a company’s carbon footprint, and its exposure to future carbon taxes or regulations, is found in its value chain ([Scope 3](https://www.o2oh.com/glossary/scope-3)) rather than direct operations.

Without Scope 3 disclosure, investors lack a full understanding of a firm’s transition risks. Scope 3 is therefore a key metric for assessing long-term financial resilience and the potential impact of mechanisms such as [**CBAM**](https://www.o2oh.com/glossary/cbam) on profitability.

See also: [IFRS S1](https://www.o2oh.com/glossary/ifrs-s1)

 

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