IFRS carbon accounting: what IFRS S2 requires, and when it reaches a US company

IFRS carbon accounting is the practice of measuring and reporting greenhouse gas emissions under IFRS S2 Climate-related Disclosures, the ISSB standard that took effect for annual reporting periods beginning on or after 1 January 2024. IFRS S2 does not define its own carbon accounting method. It requires you to measure absolute gross Scope 1, Scope 2 and Scope 3 emissions in accordance with the GHG Protocol Corporate Standard (2004), then layers its own disclosure rules on top. Those extra rules are where IFRS reporting stops matching what CDP and California ask for.

Last updated August 2026. The reason a US finance team ends up reading about IFRS S2 is almost never a US rule. It is a subsidiary in a jurisdiction that adopted the ISSB standards, a foreign listing, a parent company consolidating group-wide sustainability data, or a customer whose own reporting runs on IFRS. The standard then arrives sideways, into a team that already has a California deadline and a CDP questionnaire on its desk. The useful question is not "do we have to comply" but "how much of what we already build does IFRS S2 accept, and where does it differ".

What IFRS S2 requires you to measure

The greenhouse gas part of IFRS S2 sits in paragraph 29(a). It is short, and every clause in it has a consequence for how you build the inventory.

IFRS S2 greenhouse gas disclosure requirements and what each one means in practice

Requirement	What it means for your inventory
Absolute gross Scope 1, 2 and 3, in metric tonnes CO2e	"Gross" means before any removals or carbon credits. "Absolute" means totals, not intensity ratios. You can still disclose intensity, but it does not substitute for the absolute figure
Measured per the GHG Protocol Corporate Standard (2004)	The measurement basis is fixed. A jurisdictional relief applies only where a jurisdictional authority, or an exchange you are listed on, requires a different basis
GHG Protocol applies only where it does not conflict with IFRS S2	Paragraph B23. IFRS S2 wins on any point of conflict, and it does not adopt GHG Protocol requirements that sit outside measurement
Scope 2 disclosed on a location-based basis	IFRS S2 requires location-based Scope 2, plus information about any contractual instruments needed to understand the figure. It does not require the market-based number the way CDP does
Consider all 15 Scope 3 categories, disclose the relevant ones	You must consider every category and decide which are relevant, then disclose which categories are included. You are not required to report all 15
Disaggregate Scope 1 and 2 by consolidation group	Paragraph 29(a)(iv): split emissions between the consolidated accounting group and other investees excluded from it, so users can compare across different consolidation choices
Disclose your measurement approach and why you chose it	Paragraph B27: state whether you consolidated on operational control, financial control or equity share, and the reason

The row worth reading twice is Scope 2. Most US teams build a dual Scope 2 figure because CDP module 7 wants both, California wants both, and the GHG Protocol Scope 2 Guidance requires both. IFRS S2 asks for the location-based number and then for information about your contractual instruments. That is a narrower ask, not a contradictory one, so a company already producing both is fine. A company that built only for IFRS and later gets a CDP request is not. If you want the mechanics of the two methods, we covered them in location-based versus market-based Scope 2.

How is IFRS S2 different from the GHG Protocol?

The GHG Protocol is a measurement standard. IFRS S2 is a disclosure standard that borrows the GHG Protocol's measurement rules and adds reporting obligations around them. They are not alternatives, and you do not choose between them.

The differences that bite are the places where IFRS S2 declines to adopt something the GHG Protocol requires. The clearest example the ISSB gives in its own educational material: an entity applying IFRS S2 is not required to disclose direct CO2 emissions from biologically sequestered carbon, such as CO2 from burning biomass or biofuels, separately from the scopes, even though the GHG Protocol Corporate Standard requires that separate disclosure. IFRS S2 references the GHG Protocol Corporate Standard for measurement only, and not for its wider reporting requirements.

There is a matching subtlety on Scope 3. The jurisdictional relief lets you measure with a method other than the GHG Protocol Corporate Standard when an authority or exchange requires it, but it does not release you from using the Corporate Value Chain (Scope 3) Standard from 2011 for classifying your Scope 3 categories. The scope 3 category structure survives the relief. Our explainer on the GHG Protocol Corporate Standard covers the underlying rules, and the 15 Scope 3 categories reference sets out the classification IFRS S2 points at.

What is the difference between IFRS S1 and IFRS S2?

IFRS S1 sets the general requirements for disclosing sustainability-related financial information: the conceptual foundations, materiality, where the information goes, and when it is published. IFRS S2 is the climate-specific standard covering governance, strategy, risk management, and metrics and targets, including the greenhouse gas requirements above. You cannot apply IFRS S2 on its own. Early application of IFRS S2 is permitted only if IFRS S1 is applied as well, and full ISSB compliance means applying both in full.

The transition reliefs, and what changed in December 2025

The ISSB built first-year reliefs into the standard, and then added a second set of targeted amendments once companies started applying it. Both matter for planning, because they change what you owe in year one versus year three.

IFRS S2 greenhouse gas reliefs

Relief	Detail	When it applies
Scope 3 deferral	Scope 3 disclosure can be deferred by twelve months from first application	First annual reporting period applying IFRS S2
Existing measurement method	Paragraph C4(a): you may continue using the method you used in the period immediately before initial application, rather than switching to the GHG Protocol Corporate Standard straight away	First annual reporting period applying IFRS S2
Comparative information	You are not required to adjust comparative GHG emissions information for changes such as an acquisition or disposal in the current period	Ongoing
Category 15 narrowed	Measurement and disclosure of Scope 3 category 15 may be limited to financed emissions	Periods beginning on or after 1 January 2027, early application permitted
Classification system	A classification system other than GICS may be used when disaggregating financed emissions	Periods beginning on or after 1 January 2027, early application permitted
Partial jurisdictional relief	Entities where only part of their operations must use a different measurement method can still apply the jurisdictional relief	Periods beginning on or after 1 January 2027, early application permitted
GWP values	The jurisdictional relief extends to global warming potential values, so an entity is not forced onto the latest IPCC Assessment Report figures where its jurisdiction specifies others	Periods beginning on or after 1 January 2027, early application permitted

The GWP amendment is the quiet one. If your jurisdiction pins you to AR5 factors and your CDP response uses AR6, your methane figure moves by roughly six percent on the same activity data, for no operational reason. That is survivable if your inventory records which GWP set produced each line and can restate on demand, and painful if it does not. We set out the current values in what CO2e and GWP actually mean.

Does IFRS S2 apply to US companies?

Not by federal mandate. There is no US rule adopting the ISSB standards, and the SEC's own climate disclosure rule is going the other way: adopted in March 2024, stayed within weeks and never applied to a single filing, then formally proposed for rescission in full on 29 May 2026, published in the Federal Register on 3 June 2026 with comments closing 3 August 2026. The proposal would remove the framework rather than replace it, leaving issuers on existing principles-based disclosure obligations. Our note on the SEC climate disclosure rule tracks where that sits.

IFRS S2 still reaches plenty of US companies, through four routes that have nothing to do with the SEC:

• Subsidiaries abroad. A US parent with operations in a jurisdiction that has adopted or is adopting ISSB standards will be asked for IFRS S2-shaped data by that entity's local reporting obligation.
• Group consolidation. A US business owned by a foreign parent reporting under IFRS S2 becomes a data source for the parent's disclosure, on the parent's timetable.
• Listings and lenders. An exchange or a lending covenant can require ISSB-aligned reporting regardless of where the company is domiciled.
• Customers. Procurement teams increasingly ask suppliers for figures that match their own reporting basis, and if that basis is IFRS S2 the request arrives in that shape.

Meanwhile the actual statutory deadline on the US calendar is California's. SB 253 requires Scope 1 and Scope 2 reporting from companies above $1 billion in total revenue doing business in the state, and CARB deferred the initial deadline on 24 June 2026 from August 10 to 10 November 2026, with Scope 3 following in 2027. If you are triaging, that is the date to work backwards from. Our page on SB 253 reporting software covers the threshold and the assurance ladder, and do I need to report under SB 253 covers how the revenue test is measured.

How does IFRS S2 relate to CDP?

Closely, and deliberately. CDP has aligned its corporate questionnaire with IFRS S2, and each question in the CDP guidance carries a framework alignment note showing which IFRS S2 requirement it maps to. CDP publishes a mapping table for the connections. The practical effect is that a company answering CDP is generating most of the raw material an IFRS S2 climate disclosure needs.

CDP is explicit that this does not run the other way. Its questionnaire is aligned with IFRS S2 but should not be read as strictly fulfilling IFRS S2 requirements: some CDP questions go beyond what IFRS S2 asks, and compliance still requires applying IFRS S1 and IFRS S2 in full. Treat a CDP response as a very good head start on an ISSB disclosure, not as a substitute for one. If the questionnaire itself is what you are working through, our guide to the CDP questionnaire and its 13 modules sets out which modules carry the emissions data, and CDP reporting software covers the tooling question.

What US companies should actually do

The overlap between these regimes is larger than the differences, and the differences are mostly in presentation rather than measurement. That argues for building one inventory properly and reporting it several ways, instead of running parallel projects per framework.

1. Settle the boundary and the consolidation approach once. IFRS S2 makes you disclose it and disaggregate by it, CDP asks for it in module 6, and California assumes it. Changing it later invalidates everything downstream. Our guide to operational versus financial control covers the choice.
2. Build Scope 2 both ways even though IFRS S2 asks for one. Location-based satisfies IFRS; the market-based figure costs little extra once you have supplier contracts in hand and is required everywhere else.
3. Screen all 15 Scope 3 categories from spend, then justify what you excluded. IFRS S2 requires you to consider all 15 and disclose which you included. A spend screen is the cheapest defensible way to demonstrate you considered them. The method is in calculating Scope 3 from spend.
4. Record the method behind every line, not just the number. Emission factor source, GWP set, activity-based or spend-based, and the source document. Every framework above asks a version of this question, and the reliefs make it likely you will restate at some point.
5. Set the base year and keep it restatable. Setting an emissions baseline year covers the recalculation policy you will need when the boundary moves.

Point four is where most first inventories quietly fail. The number gets into the spreadsheet, the working behind it does not, and eighteen months later nobody can reconstruct why a figure was what it was. That is a records problem before it is a carbon problem, and it is the same reason organizations invest in being able to find the answer buried across their internal systems rather than rebuilding it from memory each cycle. For emissions specifically, our carbon accounting software keeps each reported tonne linked to the invoice line and emission factor that produced it, so a restatement is a query rather than a project.

None of this is legal or accounting advice. IFRS S2 requirements, ISSB amendments and the CARB and SEC positions described here reflect published guidance as available in August 2026, and all three are moving. Confirm current requirements with the standard-setter or your advisers before you plan against them. For the wider picture, see climate disclosure software for the regulatory map and GHG accounting software for the underlying discipline.