Local sustainability-related disclosure requirements (or standards) designed to deliver ‘functionally aligned outcomes’ to those resulting from the application of IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures, providing the same information and outcomes on sustainability-related risks and opportunities to primary users of general purpose financial reports. The information provided is useful to primary users of general purpose financial reports in making decisions relating to providing resources to the entity. The assessment of whether local requirements (or standards) are designed to deliver functionally aligned outcomes will be made on a case-by-case basis based on a holistic review of all the features in the local requirements (or standards). As noted in paragraph 19 of the Jurisdictional Guide, for local requirements (or standards) to be considered to deliver ‘functionally aligned outcomes,’ they will need to meet the criteria articulated in the Conceptual Foundations, Core Content and General Requirements in IFRS S1. 

Examples of elements of local requirements (or standards) that jurisdictions might consider in determining the extent to which a jurisdiction’s approach delivers functionally aligned outcomes include: 

In relation to IFRS S1: 

• materiality: the definition of material information needs to be aligned with that in IFRS S1. In the case of local requirements (or standards) that include materiality approaches stated to meet the needs of other stakeholders, the definition of material information for primary users (investors, lenders and other creditors) needs to be distinct and aligned with that in IFRS S1. 

• additional or incremental disclosures: in the case of local requirements (or standards) that require disclosures that are additional or incremental to those in ISSB Standards, the information that is required to be provided to meet the information needs of primary users of general purpose financial reports needs to be clearly identifiable. In particular, it needs to be stated that any additional or incremental information does ‘not obscure’ information required by ISSB Standards. 

• timing, location and reporting entity: sustainability-related financial disclosures need to be provided at the same time as the financial statements included in general purpose financial reports and for the same reporting entity as for financial statements. 

• core content: sustainability-related financial disclosures need to include the TCFD structure and information on governance, strategy, risk management and metrics and targets. 

• connected information: requirements need to include the disclosure of information that enables primary users of general purpose financial reports to understand the current and anticipated effects of sustainability-related risks and opportunities on the entity’s business model and value chain. 

• scope: information about both risks and opportunities needs to be required. Local requirements (or standards) need to have a scope that covers all sustainability-related risks and opportunities (so for example is not limited to climate). 

• industry-specific: requirements need to include disclosure of industry-specific information. The requirements should include the consideration and applicability of the disclosure topics in the SASB Standards. 

In relation to IFRS S2: 

• materiality: jurisdictions following a 'climate-first' approach designed to deliver functionally aligned outcomes with the climate requirements in ISSB Standards need to include in their requirements the necessary references from IFRS S1 (for example, materiality, location, reporting entity, timing of reporting, connected information, core content, among others). Refer to educational material. 

• greenhouse gas (GHG) emissions: climate-related requirements should include a requirement to disclose Scope 1, Scope 2 and Scope 3 GHG emissions. 
  
  
• GHG measurement framework: the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004) needs to be required as the measurement framework for GHG emissions, unless the jurisdiction’s law and regulations require another measurement framework. 

• financed emissions: for entities with activities that include asset management, commercial banking or insurance, incremental information set out in IFRS S2 needs to be required about the entity’s Category 15 GHG or those associated with its investments (financed emissions). 
  
  
• targets and transition plans: requirements should include the disclosure of climate-related targets and information about transition plans if companies are required to set these by law or regulation or have done so voluntarily. 
  
  
• scenario analysis: disclosures on the resilience of the entity’s strategy and business model to climate- related changes informed by climate-related scenario analysis are needed.