ISSB S1 and S2 for GCC companies: a practical guide

IFRS S1 and IFRS S2 are now the common language of sustainability disclosure for investors. In Qatar they are mandatory from financial years starting 1 January 2026 for listed companies, banks, insurers and Qatar Financial Centre firms. Elsewhere in the GCC, regulators and exchanges are moving in the same direction. Even where you are not yet required to report, your banks, investors and large customers will ask for ISSB-shaped data.

This guide explains how the standards work and how to produce a first report that holds up.

What the two standards do

The International Sustainability Standards Board issued both standards in June 2023. They apply to annual reporting periods beginning on or after 1 January 2024, where a jurisdiction adopts them.

IFRS S1 sets general requirements. It requires disclosure of material information about all sustainability-related risks and opportunities that could reasonably be expected to affect the entity’s cash flows, access to finance or cost of capital over the short, medium or long term.

IFRS S2 applies that logic to climate. It sets specific requirements for climate-related risks and opportunities.

Both are written for investors, lenders and other creditors. This is the key difference from impact-focused frameworks. The test is financial materiality: does this matter to the value of the company?

The four pillars

Both standards use the same four-part structure.

Pillar	The question it answers	What a GCC company typically needs
Governance	Who oversees sustainability risk and how?	Board committee mandate, frequency, skills, link to incentives
Strategy	What risks and opportunities, and what effect?	Risk list by time horizon, financial effects, transition plan, scenario resilience
Risk management	How are they identified and managed?	Process inside enterprise risk management, not alongside it
Metrics and targets	How do you measure and what are you aiming for?	Scope 1, 2 and 3, industry metrics, targets and progress

Five rules that catch first-time reporters

1. Same entity, same period. Disclosures cover the same reporting entity and period as the financial statements. If your consolidated accounts cover twelve subsidiaries, so must your emissions inventory.

2. Published with the accounts. Sustainability disclosures form part of general purpose financial reports and are published at the same time. In Qatar, QCB-regulated banks and insurers may use the first-year relief to publish later. QFMA guidance does not allow this relief for listed companies.

3. Connected information. You must explain links between sustainability disclosures and the financial statements. If climate risk affects asset lives, impairment tests or provisions, the two documents must tell the same story.

4. Explicit compliance statement. You state compliance with the ISSB Standards explicitly and without reservation. Partial compliance cannot be called compliance.

5. Judgement must be disclosed. Where you make significant judgements or face measurement uncertainty, such as in Scope 3 or scenario analysis, you disclose them.

Transition reliefs

The standards give first-year reporters relief. Under IFRS S1 and S2 as issued:

• Climate first. In the first year an entity may report only on climate-related risks and opportunities.
• No comparatives. Comparative information is not required in the first year.
• Scope 3. Scope 3 emissions need not be disclosed in the first year.
• Measurement method. An entity that used a method other than the GHG Protocol may keep it in the first year.
• Timing. First-year disclosures may be published after the financial statements, within limits.

Qatar extended the Scope 3 relief and the measurement method relief to two years for all entities reporting under the ISSB Standards. Check your regulator’s position on the other reliefs. As noted above, the QFMA does not allow the timing relief.

Scope 1, 2 and 3 under IFRS S2

IFRS S2 requires absolute gross greenhouse gas emissions for Scope 1, 2 and 3, measured under the GHG Protocol Corporate Standard unless a jurisdiction or exchange requires another method.

Scope 1 covers direct emissions from sources you own or control: gas turbines, boilers, flares, vehicles, process emissions and refrigerant leaks.

Scope 2 covers emissions from purchased electricity, steam, heating and cooling. IFRS S2 requires location-based Scope 2 and information on any contractual instruments that inform users. In the GCC, district cooling is a common Scope 2 source that companies forget.

Scope 3 covers the value chain across fifteen categories. For an industrial exporter, purchased goods and downstream processing dominate. For a bank, financed emissions dominate. For a real estate company, tenant energy use and construction materials matter most.

Our Scope 1, 2 and 3 guide covers the calculation with real grid factors. The calculator gives a quick first estimate.

Scenario analysis without a quant team

IFRS S2 requires you to assess climate resilience using scenario analysis. It allows an approach proportionate to your circumstances, taking account of the skills, capabilities and resources available to you.

For a first report in the GCC, a defensible approach looks like this:

1. Choose two or three scenarios with clear sources, such as an orderly transition and a high-warming case.
2. List the main drivers for your business under each: carbon prices in export markets, energy demand, cooling load, water stress, extreme heat on outdoor work.
3. Assess direction and rough size of financial effect, qualitatively at first.
4. Explain what you would do in response and how flexible your strategy is.
5. Disclose the method, the assumptions and the limitations.

Quantify the drivers that matter most in year two. A clear qualitative analysis is better than a precise model nobody can explain.

Industry-based metrics

IFRS S2 requires disclosure of industry-based metrics. The ISSB publishes accompanying industry-based guidance, derived from SASB Standards, that you must refer to and consider. For a GCC oil and gas company, that means metrics on flaring, methane and reserves. For a bank, financed emissions and exposure to carbon-related assets. Pick the industry descriptions that match your business and explain any you do not use.

A step by step plan

1. Confirm your regime. Which regulator, which start date, which reliefs. In Qatar, see the QCB and QFMA summaries.
2. Gap analysis. Map current reports against each paragraph of S1 and S2.
3. Materiality. Identify sustainability risks and opportunities that affect enterprise value. Document the process.
4. Governance. Update board and committee terms of reference. Brief directors.
5. Data. Close Scope 1 and 2 for the full group. Screen Scope 3.
6. Risk integration. Put climate into the enterprise risk register with owners and ratings.
7. Scenarios. Run the analysis and document it.
8. Draft and connect. Write the disclosures. Reconcile with the financial statements.
9. Assurance readiness. Document controls and evidence. Engage your assurance provider early.

What good looks like

A good first ISSB report is shorter than most GCC sustainability reports, not longer. It is specific to the business. It states numbers with methods. It admits uncertainty where it exists. It shows the board is in charge.

A weak first report reads like a brochure, lists every UN goal, and hides the emissions table on the last page.

Next step

Start with your Scope 1 and 2 estimate using our calculator, then read the ISSB regulation summary. Our sustainability reporting service supports gap analysis, materiality, scenario work and drafting.

Sources

1. IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information
2. IFRS S2 Climate-related Disclosures
3. IFRS Foundation, Qatar jurisdictional profile on use of ISSB Standards
4. GHG Protocol Corporate Accounting and Reporting Standard
5. GHG Protocol Corporate Value Chain (Scope 3) Standard

This article is general information, not legal or regulatory advice. Check the current text of each rule with the issuing authority.