The 2025 Amendments — Category 15 and Beyond

Background: Why Amendments Were Needed

IFRS S2 was effective from 1 January 2024. Almost immediately, the Transition Implementation Group (TIG, a body established to advise on IFRS S2 implementation questions) and preparers (companies responsible for preparing financial and sustainability reports) identified areas where the standard's requirements created unintended complexity or conflicts. The ISSB received 179 comment letters on the April 2025 Exposure Draft of amendments and concluded that the identified issues were genuine implementation challenges not anticipated during the standard's development.

The ISSB approved the amendments in December 2025 with 11 of 12 members in favour. They are effective for annual reporting periods beginning on or after 1 January 2027, with earlier application permitted.

Amendment 1: Scope 3 Category 15 (Paragraphs 29A to 29C)

This is the most significant amendment. The original IFRS S2 was ambiguous about what had to be included in Category 15 (Investments). Must an entity include all investment-related emissions (facilitated emissions from capital markets activities, insurance-associated emissions, derivatives) or only financed emissions from loans and equity investments?

The problem: "Facilitated emissions" (from advisory, underwriting, and distribution activities in investment banking) had no established measurement methodology. Requiring them created an impossible compliance burden without useful investor information.

The solution (Para 29A): Entities are now permitted to limit Category 15 to financed emissions only, the portion attributed to loans and investments (including loans, project finance, bonds, equity investments, and undrawn commitments). Entities may also exclude emissions attributable to derivatives.

If the limitation is applied (Para 29B): The entity must:

• (a) Explain what it treated as a derivative
• (b) Describe the financial activities excluded from Category 15

Presentation requirement (Para 29C): If Category 15 is included in Scope 3, disclose:

• Total Category 15 GHG emissions
• The subtotal of financed emissions within that total

This allows investors to see the total Category 15 figure (for comparability) while understanding how much of it is financed emissions (the most standardised component).

Amendment 2: Industry Classification Flexibility (B62A, B63A)

The problem: The original IFRS S2 required commercial banks and insurers to use the Global Industry Classification Standard (GICS) 6-digit code to disaggregate financed emissions by industry. GICS licensing costs money, and many entities in jurisdictions with regulatory reporting requirements were already using other systems (NACE in Europe, ICB, entity-specific systems).

The solution: The mandatory GICS requirement is replaced with a principles-based requirement to select an industry classification system that:

• Enables classification of investees or counterparties in a way that provides useful information about climate-related transition risk exposure
• Prioritises commonly used systems (for example, GICS, or a system required by the entity's jurisdiction)
• Is disclosed, along with the rationale for its selection

Entities using GICS because their jurisdiction requires it, or because it is the best available system for their portfolio, may continue to do so. Others with compelling reasons to use an alternative system may now do so with appropriate disclosure.

Amendment 3: Jurisdictional GHG Protocol Relief (Para 29(a)(ii), B24)

The problem: Several jurisdictions (including Australia, China, France, Japan, South Korea, Taiwan) require entities to use national measurement schemes rather than the GHG Protocol. The original IFRS S2 wording was ambiguous about whether the jurisdictional relief applied when only part of a global entity operated in a non-GHG Protocol jurisdiction.

The solution: The relief is clarified to apply "in whole or in part." If a subsidiary, branch, or facility is required by a jurisdictional authority to use a different measurement method, that part of the entity may use the alternative method while the rest uses the GHG Protocol. The entity must disclose each alternative method used and the reason.

Amendment 4: GWP Values Jurisdictional Relief (B21 to B22)

The problem: IFRS S2 requires use of GWP values from the latest IPCC assessment (AR6). Some jurisdictions require entities to use older GWP values (for example, AR5 values), creating a need to produce two sets of calculations: one for jurisdictional compliance, one for IFRS S2.

The solution: Entities required by a jurisdictional authority to use different GWP values may use those jurisdiction-required values for the part of the entity to which that requirement applies. This mirrors the approach for the measurement method relief.