IFRS S1 and S2 · core content
The four pillars: governance, strategy, risk management, metrics and targets
Side by side
The four pillars in IFRS S1 and IFRS S2
| Pillar | Objective (IFRS S1) | IFRS S1 | IFRS S2 |
|---|---|---|---|
| Governance | Understand the governance processes, controls and procedures used to monitor, manage and oversee sustainability-related risks and opportunities | ¶¶26–27 | ¶¶5–7 |
| Strategy | Understand the entity’s strategy for managing sustainability-related risks and opportunities | ¶¶28–42 | ¶¶8–23 |
| Risk management | Understand the processes to identify, assess, prioritise and monitor them, and assess the overall risk profile | ¶¶43–44 | ¶¶24–26 |
| Metrics and targets | Understand performance, including progress towards targets set or required by law or regulation | ¶¶45–53 | ¶¶27–37 |
Pillar one
Governance: who oversees, and how
The entity identifies the governance body or individual responsible for oversight and discloses how the responsibility sits in terms of reference, mandates and role descriptions (S1 ¶27(a)(i)).
It explains how that body decides it has the skills needed, how and how often it is informed, and how it weighs these risks and opportunities in strategy, major transactions and risk management, including trade-offs (¶27(a)(ii)–(iv)).
It describes how the body oversees target-setting and progress, including whether performance metrics feed remuneration (¶27(a)(v)).
It then describes management’s role: whether oversight is delegated to a management position or committee, and the controls and procedures supporting it (¶27(b)).
Where oversight is integrated across topics, governance can be disclosed once rather than topic by topic (S2 ¶7).
In the first reports under Australia’s IFRS S2-based standard, 67.5% of those its regulator reviewed named the board as the overseeing body (ASIC REP 839).
From the governance section, a reader should be able to tell who would answer if a sustainability-related risk crystallised, and how that body learns of it.
Pillar two
Strategy: what the risks do to the business
| Element | What the entity discloses | IFRS S1 |
|---|---|---|
| Risks and opportunities | Each one, the time horizon over which it could occur, and how short, medium and long term are defined and linked to planning horizons | ¶30 |
| Business model and value chain | Current and anticipated effects, and where risks and opportunities concentrate — geographies, facilities, types of asset | ¶32 |
| Strategy and decision-making | How the entity has responded and plans to respond, progress against earlier plans, and trade-offs considered | ¶33 |
| Financial effects | Current and anticipated effects on financial position, performance and cash flows | ¶¶34–40 |
| Resilience | A qualitative and, if applicable, quantitative assessment of the resilience of strategy and business model | ¶41 |
The financial-effects element has its own reliefs from quantification, explained on current and anticipated financial effects.
For climate resilience, IFRS S2 requires scenario analysis, set out on scenario analysis.
Pillar three
Risk management: the process, and how it fits
The entity discloses the processes and policies it uses to identify, assess, prioritise and monitor sustainability-related risks (S1 ¶44(a)).
That includes its inputs and parameters, whether it uses scenario analysis to identify risks, how it assesses nature, likelihood and magnitude, how it prioritises these risks against others, how it monitors them, and any change in the process since the previous period.
It discloses the processes for opportunities separately (¶44(b)), and how far the processes are integrated into its overall risk management (¶44(c)).
The objective includes letting investors assess the entity’s overall risk profile, so the disclosure describes the process that exists, including where it falls short (¶43).
Pillar four
Metrics and targets: performance, measured consistently
For each material risk and opportunity, the entity discloses the metrics an applicable standard requires and the metrics it uses itself to measure and monitor it (S1 ¶46).
The metrics include industry-based ones (¶48), and a metric taken from another source names that source (¶49).
An entity-developed metric is defined, classed as absolute, relative or qualitative, and its calculation, limitations and any third-party validation explained (¶50).
Each target discloses its metric, level, period, base period, milestones, performance and revisions (¶51), and metrics are defined and calculated consistently over time (¶52).
For climate, IFRS S2 specifies seven cross-industry metric categories and detailed target disclosures, on cross-industry metrics.
The lineage
From the TCFD, to every topic
The TCFD’s 2017 recommendations were organised around the same four thematic areas, with eleven recommended disclosures beneath them.
IFRS S2 “integrates and builds on the recommendations” of the TCFD (IFRS S2 standard history), turning recommendations into requirements and adding detail.
IFRS S1 takes the same structure beyond climate, so a water, workforce or nature risk is reported under the same four headings.
The eleven TCFD disclosures mapped to UK SRS S2 paragraphs are on moving from TCFD to UK SRS.
In the UK
The same four pillars in UK SRS
UK SRS S1 and UK SRS S2 carry the core content of the IFRS texts, and governance is not among the UK’s Annex A differences.
A UK listed company reports against all four pillars on a comply-or-explain basis from periods beginning on or after 1 January 2027, with climate first.
Frequently asked
The four pillars, answered
What are the four pillars of the ISSB Standards?
Governance, strategy, risk management, and metrics and targets.
IFRS S1 ¶25 calls them the core content and requires disclosures in all four for each sustainability-related risk and opportunity that could affect the entity’s prospects; IFRS S2 applies the same four to climate.
Where do the four pillars come from?
From the Task Force on Climate-related Financial Disclosures, whose 2017 recommendations were organised in the same four thematic areas.
IFRS S2 integrates and builds on those recommendations, and IFRS S1 extends the structure to every sustainability topic.
What does the governance pillar require under IFRS S1 and S2?
The body or individual responsible for oversight, and how responsibilities appear in terms of reference; how it ensures it has the skills; how and how often it is informed; how it weighs risks and opportunities in strategy, major transactions and risk management, including trade-offs; how it oversees targets and whether metrics feed remuneration; and management’s role, including any delegation and the controls used.
Can governance be reported once for all topics?
Yes.
Where oversight of sustainability-related risks and opportunities is managed on an integrated basis, the entity avoids duplication by giving integrated governance disclosures rather than separate ones for each topic (IFRS S2 ¶7).
What is the difference between the strategy and risk management pillars?
Strategy is about what the risks and opportunities are and what they do to the business — business model, decisions, financial position and resilience.
Risk management is about the processes used to identify, assess, prioritise and monitor them, and how those processes fit into overall risk management.
Do UK SRS S1 and S2 use the same four pillars?
Yes.
UK SRS carries the core content of IFRS S1 and S2, and governance in particular is not among the UK’s Annex A differences.
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.
- IFRS FoundationIFRS S1, full text — Core content, ¶¶25–53
The four areas for every sustainability-related risk and opportunity.
- IFRS FoundationIFRS S2, full text (December 2025) — ¶¶5–37
The four areas for climate, with climate-specific limbs.
- IFRS FoundationIFRS S2 — Navigator page and standard history
IFRS S2 “integrates and builds on the recommendations” of the TCFD.
- IFRS FoundationTCFD and the IFRS Foundation
The IFRS Foundation took over monitoring of climate-related disclosures.
- TCFDFinal Report: Recommendations of the TCFD (June 2017, PDF)
Where the four thematic areas come from.
- Department for Business and TradeUK SRS S1 (PDF), ¶¶25–53
The same core content in the UK text.
- Department for Business and TradeUK SRS S2 (PDF), ¶¶5–37
Governance is not among the Annex A differences.
- Financial Conduct AuthorityPS26/19 (PDF)
The core content on comply or explain for UK listed companies from 2027.
- ASICREP 839 (21 September 2026, PDF)
In the first AASB S2 reports, 67.5% named the board as the overseeing body; governance and risk management were the clearest pillars.
- IFRS FoundationComparison: IFRS S2 with the TCFD recommendations (PDF)
Pillar by pillar, what IFRS S2 adds to the TCFD.
- Department for Business and TradeConsultation response (PDF), Annex A
No UK difference on the core content beyond the industry-guidance verbs.
Continue reading
Read next
IFRS S1 and S2
The two standards side by side.
Financial effects
Current and anticipated financial effects, and when quantities may be omitted.
Cross-industry metrics
The seven IFRS S2 metric categories and targets.
The TCFD framework
The four pillars and eleven disclosures in the TCFD’s own words.
UK SRS S1
The UK general requirements.
IFRS Sustainability Disclosure Standards
The whole ISSB family.