NIIF S1 Y S2

BODY OF THE ARTICLE:

Learn what IFRS S1 and S2 consist of, and what changes they will bring to companies.

In this context, on June 26, 2023, the International Sustainability Standards Board (ISSB), through the IFRS Foundation, has published the official version of its two inaugural standards related to the disclosure of sustainability matters: IFRS S1, which establishes general requirements regarding sustainability issues and, IFRS 2 which focuses on the disclosure of climate-related information. This marks the beginning of a new era of sustainability-related information in capital markets.

IFRS S1 provides a general framework for sustainability reporting, ensuring that companies disclose relevant, comparable and useful information to investors. Its objective is to improve transparency and allow better economic decision-making. Key features include:

· Disclosure of sustainability risks and opportunities that may affect the company's financial position.

· Consistent application with IFRS Accounting Standards.

· Use of presentation principles similar to those used in traditional financial reporting.

IFRS S2 focuses specifically on the disclosure of risks and opportunities related to climate change. Based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), this standard requires companies to report on:

· Physical and transition risks arising from climate change.

· Strategies and plans to manage such risks.

· Metrics and targets used to assess the impact of climate change on the business.

BENEFITS FOR COMPANIES WHEN IMPLEMENTING IFRS S1 AND S2

1. Greater Transparency and Comparability

· They allow investors and stakeholders to access standardized information on sustainability and climate risks.

· They make it easy to compare across companies, sectors, and regions.

2. Access to Financing and Attracting Investors

· Institutional investors and investment funds are increasingly interested in companies with sustainable practices.

· The implementation of IFRS S1 and S2 can improve the company's risk profile and reduce financing costs.

3. Regulatory Compliance and Legal Risk Reduction

· They facilitate compliance with international and local regulations on sustainability and financial disclosure.

· They reduce the risk of penalties for non-compliance with environmental and sustainability regulations.