IFRS S1 and S2 Industry-Based Metrics: How to Select Relevant SASB Guidance

Industry selection is not solved by copying the legal entity classification, the largest revenue code or the parent company description. A reporting group can operate several business models, expose investors to different sustainability-related drivers and use different operating measures in each part of the group. The purpose of the industry-based guidance is to help identify information that is likely to be useful, not to force the group into one label.

The mandatory action is to refer to and consider the guidance. The final disclosures remain governed by IFRS S1 and IFRS S2, including fair presentation, materiality, aggregation and disaggregation, connected information and the requirement to add information when specifically applicable requirements are insufficient.

“Shall” is mandatory. An entity cannot disregard the relevant industry-based guidance when applying the specified IFRS S1 and IFRS S2 requirements.

The guidance is assessed against the entity’s business model and activities. A topic or metric can be inapplicable to the entity’s circumstances or not material after consideration.

The exercise produces a population of potentially relevant risks, opportunities and information. It does not replace the entity’s materiality judgement.

Industry-based guidance does not override cross-industry IFRS S2 requirements, such as greenhouse gas emissions or the other cross-industry metric categories.

If the industry metrics do not provide enough decision-useful information, IFRS S1 can require additional entity-specific information.

Figure 1. Industry selection for a diversified group: activities first, then guidance, materiality and presentation.

The following sequence is an LRA implementation method, not a prescribed checklist in IFRS S1 or IFRS S2. It is designed to make the required refer-and-consider judgement traceable.

A diversified group can use more than one industry. The July 2025 IFRS Foundation educational material specifically recognises that an entity with activities in several industries may select several industry descriptions and apply metrics only to the relevant parts of the business. This is usually more faithful than forcing dissimilar operations into the largest segment.

SASB activity metrics describe the scale of an activity or operation. They are intended to be used with performance metrics to provide operational context, support normalisation and facilitate comparison. Examples can include production volume, number of accounts, floor area, passenger kilometres or assets under management, depending on the industry.

An activity metric is not automatically material simply because it appears in a SASB Standard. The entity considers whether the measure is needed to interpret the related metric, whether its definition matches the business, whether the period and boundary are consistent, and whether an additional or alternative denominator would provide more useful information.

The correct response to a poor-fit metric is not to omit the issue silently. The entity first asks whether the disclosure topic is relevant but the specified metric is inapplicable, whether another metric in the same or another industry is more useful, and whether an entity-specific metric or narrative disclosure is required for fair presentation.

Preserve the underlying risk or opportunity even when the suggested metric is not suitable.

Define the entity-specific metric, unit, boundary, methodology, assumptions, data source and reason for use.

Explain changes to metrics or methodologies when they affect comparability.

Connect the metric to strategy, risk management, targets and financial effects rather than publishing an isolated number.

Avoid replacing an established comparable metric merely because an internal alternative makes performance look better.

The ISSB Standards do not prescribe a specific documentation file for the refer-and-consider process. However, a systematic process is expected, and documentation is often necessary for governance, internal control, assurance, regulatory review and consistent reassessment. The distinction matters: the register below is recommended implementation practice, not an additional disclosure requirement.

A hypothetical listed group operates a commercial bank, a property-development and leasing business, and a digital payments platform. The parent’s legal classification is financial services, but the property segment represents a material share of assets and capital expenditure, while the platform creates distinct data-security, workforce and technology risks.

The group selects relevant guidance for commercial banking, real estate activities and digital-platform activities. It does not aggregate energy intensity, customer metrics or operational scale across the three businesses where the definitions and drivers differ. It uses relevant SASB activity metrics to explain scale, adds an entity-specific metric for platform service availability, and records why several real-estate metrics do not apply to developments sold before occupation. The group discloses the sources and industries applied and identifies the selection of multiple industries as a significant judgement where that information is material.

Selecting one industry solely from revenue, legal registration or a stock-exchange classification.

Assuming every metric in the selected SASB Standard is automatically required and material.

Treating activity metrics as optional decoration rather than testing whether they are needed for interpretation and comparability.

Aggregating dissimilar industries into one number that obscures materially different drivers or performance.

Using “not applicable” to conceal a data gap or an inconvenient result.

Ignoring value-chain or customer-industry exposure that is relevant to identifying risks and opportunities.

Failing to add entity-specific information where the guidance does not capture the business model.

Applying proposed amendments before they are issued without a clear early-adoption or version basis.