Short answer
The answer, before the reasoning
IFRS S1 E5 permits an entity, only in its first annual reporting period applying IFRS S1, to report information about climate-related risks and opportunities only. The entity still applies IFRS S1 insofar as it relates to climate information and applies IFRS S2 in full, and it must disclose that it used the relief.
What can be omitted is the year-one information about non-climate sustainability-related risks and opportunities—not the applicable S1 architecture for materiality, reporting entity, connected information, timing, judgements, uncertainty, errors and compliance. In year two, current-year non-climate disclosures are required, climate comparatives are required, and non-climate comparatives are not required. The relief therefore needs a parallel year-one build plan for non-climate reporting.
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
Why the relief is often misunderstood
Climate-first is frequently described as “apply IFRS S2 first”. That shorthand is incomplete. IFRS S2 is a topic-specific Standard and is applied with IFRS S1. The relief narrows the subject matter in the first annual period; it does not turn IFRS S2 into a standalone reporting framework or suspend IFRS S1’s general requirements.
The distinction matters for the reporting entity, materiality, location and timing, connected information, comparative rules, significant judgements, measurement uncertainty, error correction and the compliance statement. Missing those requirements can make a climate report technically incomplete even where the climate metrics and narrative appear detailed.
Quick orientation
- Applies to
- Only the first annual reporting period in which an entity applies IFRS S1, if the issued E5 relief is available under the applicable local basis.
- Primary decision
- Whether to elect climate-first, what S1 requirements remain applicable and how to make the year-two transition.
- Key sources
- IFRS S1 E5–E6; IFRS S1 general requirements; IFRS S2; official ISSB educational material published January 2025.
- Common confusion
- Climate-first is not permanent climate-only reporting and is not automatically the same as a jurisdiction’s phased climate mandate.
1. What the relief actually says
In the first annual reporting period in which an entity applies IFRS S1, E5 permits disclosure of information only about climate-related risks and opportunities in accordance with IFRS S2. The entity consequently applies IFRS S1 only insofar as its requirements relate to that climate information. If it uses the relief, it discloses that fact.
Figure 1. Climate-first narrows the subject matter but retains the applicable IFRS S1 architecture and IFRS S2 climate requirements.
In practice
| Element | Climate-first effect | What to record |
|---|---|---|
| Subject matter | Non-climate sustainability-related risks and opportunities can be omitted from the first-year ISSB disclosure. | Relief decision, local permission and boundary between climate and non-climate matters. |
| General architecture | Applicable IFRS S1 requirements continue to govern the climate disclosures. | S1 applicability checklist and requirement-level sign-off. |
| Climate content | IFRS S2 climate-specific requirements apply. | S2 requirement map, materiality judgements, data and controls. |
| Relief disclosure | Use of E5 is disclosed. | Basis-of-preparation wording and approval. |
| Duration | The option is limited to the first annual reporting period. | Year-two full-scope implementation plan. |
2. What may be omitted in year one
The omission relates to information about sustainability-related risks and opportunities other than climate-related risks and opportunities. Depending on the entity, this might include investor-relevant information about water, biodiversity, human capital, product safety, cyber security, supply-chain labour, community relationships or other sustainability matters—provided those matters are genuinely non-climate and the local reporting basis permits the E5 relief.
In practice
| Potentially omitted first-year content | Climate connection test |
|---|---|
| Non-climate risk and opportunity descriptions | Could physical or transition climate change drive, amplify or interact with the matter? |
| Non-climate governance and management information | Does the governance process also oversee climate-related risks or targets? If so, the climate portion remains relevant. |
| Non-climate strategy and financial effects | Are any effects caused by climate-related regulation, markets, hazards, technology or adaptation? |
| Non-climate metrics and targets | Is the metric used to manage a climate-related risk or opportunity, or needed to explain a climate target? |
| Industry-based non-climate information | Does the industry topic contain climate-specific or connected information required by IFRS S2 or material under the climate scope? |
3. Which IFRS S1 requirements still apply?
The ISSB’s January 2025 educational material maps the IFRS S1 requirements applicable when only climate-related disclosures are provided. The following practitioner summary groups those requirements by function. It is not a substitute for the official paragraph-level table.
In practice
| IFRS S1 function | How it applies to climate-first reporting |
|---|---|
| Objective and scope | Climate-related financial information is prepared for primary users and focuses on risks and opportunities that could reasonably be expected to affect prospects. |
| Fair presentation | The climate disclosures provide a complete, neutral and accurate depiction and include additional material information when specified requirements are insufficient. |
| Materiality | The entity discloses material climate-related financial information and avoids omission, misstatement or obscuring. |
| Reporting entity | The sustainability-related financial disclosures use the same reporting entity as the related financial statements. |
| Connected information | Connections among climate governance, strategy, risk, metrics, financial effects and financial statements are explained. |
| Value chain and reassessment | The entity applies the applicable information and value-chain scope mechanisms and reassesses on significant change. |
| Location and cross-reference | Disclosures are clearly identifiable within general purpose financial reports; cross-references meet the specified conditions. |
| Timing and reporting period | The climate disclosures ordinarily accompany the related financial statements and cover the same period, subject to the first-year timing relief if used. |
| Comparatives | First-year comparative relief applies; the E6 year-two consequence must be planned. |
| Compliance statement | A statement of compliance is made only if all applicable requirements are met; use of E5 is disclosed. |
| Judgements, uncertainty and errors | The entity explains significant judgements, high measurement uncertainty and corrects material prior-period errors under the applicable requirements. |
| Transition | E3–E6 and relevant IFRS S2 transition reliefs are applied and disclosed accurately. |
In practice
4. What IFRS S2 requires in the climate-first report
| Core area | Climate-first workstream |
|---|---|
| Governance | Governance body oversight, management role, controls and integration into broader governance. |
| Strategy | Physical and transition risks and opportunities, time horizons, business model and value-chain effects, strategy and decision-making, current and anticipated financial effects, and climate resilience. |
| Risk management | Processes and policies for identifying, assessing, prioritising and monitoring climate risks and opportunities and integration with overall risk management. |
| Metrics and targets | GHG emissions, cross-industry metrics, industry-based metrics, targets, progress, transition-plan information where applicable, and planned carbon-credit use for net targets. |
5. Can the entity state compliance with ISSB Standards?
IFRS S1 paragraph 72 requires an explicit and unreserved statement of compliance when the entity’s sustainability-related financial disclosures comply with all requirements of IFRS Sustainability Disclosure Standards. Official climate-first educational material explains that an entity can make that statement in the first year when it uses E5, applies all applicable IFRS S1 requirements to climate information, applies IFRS S2, and discloses use of the relief.
In practice
| Reporting basis | Possible statement approach | Caution |
|---|---|---|
| Issued IFRS S1/S2 with E5 relief | Full ISSB compliance statement may be possible if every applicable requirement is met and the relief is disclosed. | Complete a requirement-level checklist; climate-first does not excuse missing S1 mechanics or S2 content. |
| Local standard directly incorporates E5 | Follow local compliance wording and assess whether an additional ISSB compliance statement is supportable. | Local modifications can prevent an unqualified ISSB claim even if the report is climate first. |
| Local climate-only mandate not based on E5 | State compliance with the local instrument as appropriate. | A local phased climate requirement is not automatically equivalent to the ISSB E5 relief or full ISSB compliance. |
| Voluntary climate-aligned disclosure | Describe the basis accurately, such as “prepared with reference to” selected requirements if full compliance is not achieved. | Avoid “in accordance with IFRS S2” as though S2 were standalone if applicable S1 requirements are not met. |
6. What happens in year two
IFRS S1 E6 creates a specific comparative pattern after climate-first reporting. In the second annual reporting period, the entity is not required to provide comparative information about sustainability-related risks and opportunities other than climate-related risks and opportunities. Climate-related comparative information is required. Current-year non-climate information is required because the E5 scope relief has expired.
In practice
| Information type in year two | Current-year information | Comparative information |
|---|---|---|
| Climate-related risks and opportunities | Required under applicable IFRS S1 and IFRS S2 requirements. | Required, subject to other specific transition or comparative provisions. |
| Non-climate sustainability-related risks and opportunities | Required under IFRS S1 and any applicable topic-specific Standards. | Not required in the second annual reporting period after E5. |
| Scope 3 GHG emissions if C4(b) was also used | Required for the current year. | The year-one comparative may remain omitted under IFRS S2 C5. |
| GHG method if C4(a) was also used | Current-year measurement follows applicable IFRS S2 requirements. | The year-one comparative may retain the relieved method basis under C5. |
7. Build the non-climate system during year one
The Standards prescribe the year-one relief and year-two comparative consequence, not a project timetable. In practice, however, a successful climate-first election requires a parallel non-climate build. Waiting until the second reporting year begins leaves too little time to identify risks and opportunities, assess material information, establish methods and controls, connect financial effects and complete governance review.
Figure 2. A year-one non-climate build plan prevents the climate-first relief from becoming a year-two reporting cliff.
In practice
| Workstream | Year-one output | Year-two use |
|---|---|---|
| Risk and opportunity universe | Candidates from risk processes, strategy, SASB topics, value-chain evidence, sector analysis and stakeholder or expert input. | Approved list of sustainability-related risks and opportunities that could reasonably affect prospects. |
| Material information assessment | Information-level judgement criteria, decision records, aggregation and whole-report review. | Controlled non-climate disclosure scope. |
| Governance and ownership | Oversight, management responsibilities, data owners and disclosure committee. | Evidence-backed current-year governance disclosures and sign-off. |
| Metrics and data | Metric register, definitions, boundary, source systems, estimates, controls and gap log. | Current-year non-climate metrics with no prior comparative requirement. |
| Financial effects | Pathways to financial statements, planning assumptions, qualitative effects and quantitative development plan. | Connected strategy and financial-effects disclosures. |
| Drafting and dry run | Prototype disclosures, evidence index, reviewer findings and remediation. | Reduced year-two drafting and assurance-readiness risk. |
8. Decision process before electing E5
Confirm that E5 is available under the entity’s local mandatory or approved voluntary reporting basis.
Assess climate readiness and the maturity of non-climate risk, opportunity, data and control processes.
Evaluate the investor information consequence of omitting non-climate disclosures in year one.
Map every IFRS S1 requirement that remains applicable to the climate report using the official educational material.
Assess interactions with the no-comparatives, publication-timing, GHG-method and Scope 3 reliefs.
Approve the compliance or basis-of-preparation wording and the required disclosure that E5 was used.
Fund and govern the non-climate build plan and year-two comparative design before year-one reporting begins.
In practice
10. Illustrative climate-first basis-of-preparation wording
| Annotation | Purpose | Evidence |
|---|---|---|
| First application and reporting basis | Clarifies that this is an ISSB transition election rather than a generic climate-only report. | Applicability memo and standards checklist. |
| S1 plus S2 interaction | Avoids the misleading statement that only IFRS S2 was applied. | S1 applicable-requirements map and S2 requirement map. |
| Scope omitted | Explains the precise subject matter omitted. | Climate/non-climate boundary record. |
| Year-two plan | Shows that the entity is managing the transition. | Approved programme, owners and milestones. |
| Comparative relief | Separates E5 scope from E3/C3 comparative relief. | First-time application decision matrix. |
In practice
11. Weak versus stronger wording
| Weak wording | Problem | Stronger pattern |
|---|---|---|
| “This report applies IFRS S2 only.” | Suggests S2 is standalone and omits applicable S1 requirements. | State that the E5 relief was used, S1 was applied insofar as climate-related, and S2 was applied. |
| “The company chose climate-only reporting.” | Does not identify E5, first-year limitation, local basis or omitted scope. | Name the relief, period, legal/voluntary basis, omitted non-climate subject matter and year-two consequence. |
| “Non-climate information is not material.” | Conflates relief use with a completed materiality conclusion. | Do not claim non-climate immateriality unless separately assessed and evidenced; explain that the subject matter is omitted under transition relief. |
| “The report is aligned with ISSB.” | Avoids the precise compliance assessment. | Use an explicit compliance statement only when all applicable requirements are met; otherwise describe the basis accurately. |
In practice
12. Common errors
| MISTAKE 1 | Applying IFRS S2 without the applicable IFRS S1 requirements. |
|---|---|
| Why it happens | Climate-first is shortened to “S2 first”. |
| Why it matters | Materiality, reporting entity, timing, connected information, uncertainty, errors and compliance controls are incomplete. |
| Correction | Use the official S1 climate-first paragraph map and assign every applicable requirement. |
| Evidence of correction | Completed S1 applicability checklist with reviewer sign-off. |
In practice
| MISTAKE 2 | Treating a local climate-only mandate as IFRS S1 E5. |
|---|---|
| Why it happens | Both produce climate-only public information in an early phase. |
| Why it matters | The entity may claim ISSB compliance without meeting the E5 conditions or all applicable requirements. |
| Correction | Separate the local legal basis from the ISSB transition relief and map modifications. |
| Evidence of correction | Jurisdictional overlay and approved compliance wording. |
In practice
| MISTAKE 3 | Omitting connected non-climate information that is necessary to explain climate |
|---|---|
| Why it happens | Ownership and topic labels drive scope rather than the climate relationship. |
| Why it matters | The climate disclosure is incomplete or misleading. |
| Correction | Apply a climate-connection test and include material information needed to explain climate-related risks, opportunities and effects. |
| Evidence of correction | Connection assessment and disclosure-level materiality record. |
In practice
| MISTAKE 4 | Concluding that omitted non-climate matters are immaterial. |
|---|---|
| Why it happens | Relief use is confused with a completed materiality assessment. |
| Why it matters | Unsupported public claims and poor year-two planning. |
| Correction | Describe the transition omission accurately and conduct the non-climate assessment separately. |
| Evidence of correction | Year-one non-climate universe and assessment workplan. |
In practice
| MISTAKE 5 | Starting non-climate implementation only in year two. |
|---|---|
| Why it happens | The relief is treated as a one-year pause. |
| Why it matters | No time remains for data definitions, financial effects, controls, drafting and governance before publication. |
| Correction | Run the non-climate workstream during year one and complete a dry report. |
| Evidence of correction | Quarterly plan, dry-run findings and remediation tracker. |
In practice
13. Myth versus reality
| MYTH | Climate-first lets an entity postpone all non-climate work until the second repo |
|---|---|
| REALITY | It postpones the public non-climate disclosure requirement for the first annual period. In year two, current-year non-climate information is required. A controlled implementation therefore needs identification, materiality, data, financial-effects, governance and drafting work during year one. |
| Why the confusion arises | The text of E5 focuses on what may be disclosed in the first year, so the operational lead time for year two is easy to underestimate. |
| Practical consequence | Approve a non-climate build plan at the same time as the E5 election, with owners, milestones and a dry-run gate. |
In practice
16. Related standards and learning path
| Link role | Instrument or article | Use |
|---|---|---|
| Primary | IFRS S1 E5–E6 and IFRS S2 | Scope of the relief and year-two comparative consequence. |
| Official support | Applying IFRS S1 when reporting only climate-related disclosures | Paragraph-level map of applicable S1 requirements. |
| Broader transition | First-Time Application of IFRS S1 and S2 | Integrate E5 with other first-year reliefs. |
| Comparatives | IFRS S1 and S2 Comparatives, Restatements and Errors | Prepare year-two comparative and correction controls. |
| Materiality | IFRS S1 Materiality Assessment | Apply the investor-focused information filter to climate and non-climate workstreams. |
No—a successful climate-first election requires a parallel non-climate build during year one. Waiting until the second reporting year begins leaves too little time to identify risks and opportunities, assess material information, establish methods and controls, connect financial effects and complete governance review.
Questions
Questions people ask
Is climate-first the same as applying only IFRS S2?
IFRS S1 E5 permits an entity, only in its first annual reporting period applying IFRS S1, to report information about climate-related risks and opportunities only. The entity still applies IFRS S1 insofar as it relates to climate information and applies IFRS S2 in full, and it must disclose that it used the relief.
What can be omitted?
The entity still applies IFRS S1 insofar as it relates to climate information and applies IFRS S2 in full, and it must disclose that it used the relief. What can be omitted is the year-one information about non-climate sustainability-related risks and opportunities—not the applicable S1 architecture for materiality, reporting entity, connected information, timing, judgements, uncertainty, errors and compliance. In year two, current-year non-climate disclosures are required, climate comparatives are required, and non-climate comparatives are not required.
Must use of the relief be disclosed?
The entity consequently applies IFRS S1 only insofar as its requirements relate to that climate information. If it uses the relief, it discloses that fact.
Can the entity state compliance with ISSB Standards?
IFRS S1 paragraph 72 requires an explicit and unreserved statement of compliance when the entity’s sustainability-related financial disclosures comply with all requirements of IFRS Sustainability Disclosure Standards. Official climate-first educational material explains that an entity can make that statement in the first year when it uses E5, applies all applicable IFRS S1 requirements to climate information, applies IFRS S2, and discloses use of the relief.
What comparatives are required in year two?
What can be omitted is the year-one information about non-climate sustainability-related risks and opportunities—not the applicable S1 architecture for materiality, reporting entity, connected information, timing, judgements, uncertainty, errors and compliance. In year two, current-year non-climate disclosures are required, climate comparatives are required, and non-climate comparatives are not required.
Should non-climate work wait until year two?
No—a successful climate-first election requires a parallel non-climate build during year one. Waiting until the second reporting year begins leaves too little time to identify risks and opportunities, assess material information, establish methods and controls, connect financial effects and complete governance review.
Sources
Primary sources
Take it with you
The checklists as a working spreadsheet
Every checklist and table on this page, with empty status, owner and evidence columns for your team to fill in and keep.
✓ LRA AI Assistant · Human-in-the-loop
Ask about this guide
It answers from this page, and reaches into the linked disclosure cards when your question is about the standard itself. Your first two answers are free without signing in.
Go deeper · IFRS S1 / S2
IFRS S1 and S2 training
Financial materiality, scenario analysis and the S2 climate disclosures, applied to your own reporting.
Available as Guided Flex, Live Cohort, 1:1 Expert Mentorship or Corporate Programme.
