Current or anticipated effects
The effects are not separately identifiable, or the measurement uncertainty is so high the number would not be useful.
S1 ¶38; S2 ¶19.IFRS S1 and S2 · strategy, financial effects
Anticipated financial effects: the numbers, and when words will do
IFRS S1 ¶¶34–40 and IFRS S2 ¶¶15–21 require an entity to say how sustainability and climate risks have affected its financial position, performance and cash flows, and how they are expected to.
The standards also say, precisely, when an entity may give qualitative information instead of numbers, and what it must give in their place.
What to disclose
Four things, in numbers and words
| Limb | What the entity discloses | S1 | S2 |
|---|---|---|---|
| This period | How the risks and opportunities have affected financial position, financial performance and cash flows | ¶35(a) | ¶16(a) |
| Carrying amounts at risk | The risks and opportunities with a significant risk of a material adjustment to carrying amounts of assets and liabilities within the next year | ¶35(b) | ¶16(b) |
| Financial position, later | How financial position is expected to change, given investment and disposal plans — including plans not contractually committed — and planned sources of funding | ¶35(c) | ¶16(c) |
| Performance and cash flows, later | How financial performance and cash flows are expected to change over the short, medium and long term | ¶35(d) | ¶16(d) |
Investment plans the entity is not contractually committed to are included, so the disclosure reflects strategy, not only signed contracts.
Quantitative information may be a single amount or a range.
Proportionality
Reasonable and supportable, without undue cost or effort
In preparing anticipated financial effects, the entity uses all reasonable and supportable information available at the reporting date without undue cost or effort, and an approach commensurate with its skills, capabilities and resources (S1 ¶37; S2 ¶18).
Information it already uses for its financial statements, its business model, its strategy and its risk management is treated as available without undue cost or effort (B9).
These are the standards’ proportionality mechanisms, and the IFRS Foundation has published educational material explaining them and the anticipated-effects disclosures (IFRS Foundation).
IFRS S1 B10, in brief
“An entity need not undertake an exhaustive search for information… The assessment of what constitutes undue cost or effort depends on the entity’s specific circumstances and requires a balanced consideration of the costs and efforts for the entity and the benefits of the resulting information for primary users.”
IFRS S1 ¶B10 (applied to anticipated effects through ¶37).
When numbers can be omitted
Three tests, and what replaces the number
If a test is met, the entity still has three duties (S1 ¶40; S2 ¶21).
It explains why it has not given quantitative information.
It gives qualitative information, identifying the line items, totals and subtotals in the financial statements that are likely to be, or have been, affected.
And it gives quantitative information about the combined financial effects of that risk with other risks and factors, unless that combined figure would not be useful either.
So the relief changes the form of the disclosure, not whether there is one.
May the entity omit the number?
Only if one of three tests is met (S1 ¶¶38–39).
Only if one of three tests is met (S1 ¶¶38–39).
Anticipated effects only
The entity lacks the skills, capabilities or resources to quantify them.
S1 ¶39; S2 ¶20.In practice
What the first reports did with the relief
Australia’s regulator reviewed 40 reports under AASB S2, its IFRS S2-based standard, and found 37.5% gave only qualitative financial effects (ASIC REP 839).
Measurement uncertainty was the reason most often given, relied on to some extent by 57.5%, and some reports did not name the affected line items or explain why numbers were missing.
ASIC pointed to the anticipated effects of board-approved mitigation or adaptation plans as an area where numbers may be reliable sooner, and highlighted a sensitivity analysis giving a range of cash-flow effects as better practice.
Connected information
Tied to the financial statements
IFRS S1 requires sustainability disclosures to use data and assumptions consistent with the financial statements to the extent possible, and to explain connections between them.
For financial effects that means the assumptions behind an anticipated effect should be recognisable in impairment testing, useful lives and provisions, or the difference explained.
Climate resilience, assessed with scenario analysis under IFRS S2 ¶22, is the forward-looking companion to these disclosures; it is set out on scenario analysis.
In the UK
The same requirement in UK SRS
Annex A of the UK government’s response lists no difference on these paragraphs, and states that where a requirement is not in its table there is no difference (Annex A).
UK SRS S1 and UK SRS S2 therefore carry the same financial-effects requirements and reliefs, on comply or explain for UK listed companies from 2027.
Frequently asked
Financial effects, answered
What are current and anticipated financial effects?
Current financial effects are the effects of sustainability-related (or climate-related) risks and opportunities on the entity’s financial position, financial performance and cash flows for the reporting period.
Anticipated financial effects are the expected effects over the short, medium and long term, taking into account how the risks and opportunities are included in financial planning (IFRS S1 ¶34; IFRS S2 ¶15).
Do anticipated financial effects have to be quantified?
Quantitative and qualitative information is required, but an entity need not quantify an effect if it is not separately identifiable or if measurement uncertainty is so high that the number would not be useful.
It need not quantify anticipated effects if it lacks the skills, capabilities or resources.
In each case it explains why, gives qualitative information including the affected line items, and gives combined quantitative effects where useful (S1 ¶¶38–40).
Can financial effects be given as a range?
Yes.
In providing quantitative information, an entity may disclose a single amount or a range (IFRS S1 ¶36; IFRS S2 ¶17).
What does reasonable and supportable information without undue cost or effort mean?
Information covering entity-specific factors and general external conditions, including past events, current conditions and forecasts.
Information already used to prepare the financial statements, run the business, set strategy and manage risks is considered available without undue cost or effort, and an entity need not undertake an exhaustive search (IFRS S1 B8–B10).
Which assets and liabilities must be flagged?
Those for which there is a significant risk of a material adjustment to their carrying amounts within the next annual reporting period because of the risks and opportunities identified (IFRS S1 ¶35(b); IFRS S2 ¶16(b)).
Is the UK requirement the same?
Yes.
Annex A of the UK government’s response lists no difference on these paragraphs, so UK SRS S1 and S2 carry the same financial-effects requirements and reliefs.
Sources
Primary sources
Every figure, date and status on this page traces to the instrument’s owner.
Secondary commentary is never the source for a number.
Checked against 10 sources fromIFRS FoundationDepartment for Business and TradeFinancial Conduct AuthorityASIC
- IFRS FoundationIFRS S1, full text — ¶¶34–40 and B8–B10
Current and anticipated financial effects, and reasonable and supportable information.
- IFRS FoundationIFRS S2, full text (December 2025) — ¶¶15–21
The same requirements for climate, with examples.
- IFRS FoundationWorld Standard-setters Conference 2026 — Application of IFRS S1 and IFRS S2 (PDF)
Educational material on proportionality mechanisms and on anticipated financial effects.
- Department for Business and TradeUK SRS S1 (PDF)
The same financial-effects paragraphs in the UK text.
- Department for Business and TradeUK SRS S2 (PDF), ¶¶15–21
The climate financial-effects paragraphs in the UK text.
- Department for Business and TradeConsultation response (PDF), Annex A
No Annex A row on these paragraphs: “where requirements … are not included in the table, there are no differences”.
- Financial Conduct AuthorityPS26/19 (PDF)
UK SRS on comply or explain for listed companies from 2027.
- ASICREP 839 (21 September 2026, PDF)
In the first AASB S2 reports, 37.5% gave only qualitative financial effects and 57.5% relied on measurement uncertainty.
- IFRS FoundationComparison: IFRS S2 with the TCFD recommendations (PDF)
IFRS S2 sets criteria for when quantitative or qualitative financial effects are required.
- IFRS FoundationIFRS S2 Accompanying Guidance (June 2023)
Illustrative examples accompanying, but not part of, IFRS S2.
Continue reading
Read next
Core content
The four pillars
Where financial effects sit within strategy.
Resilience
Scenario analysis
Climate resilience under IFRS S2 ¶22.
The general standard
IFRS S1
The general requirements, paragraph by paragraph.
The climate standard
IFRS S2
The climate standard, paragraph by paragraph.
The UK
UK SRS S1
The UK general requirements.
The hub
IFRS Sustainability Disclosure Standards
The whole ISSB family.