The International Financial Reporting Standards (IFRS), developed by the International Accounting Standards Board (IASB), serve as a unified global accounting framework that enhances transparency and comparability in financial reporting. As sustainability and ESG considerations gain importance worldwide, IFRS has introduced two new sustainability disclosure standards—IFRS S1 and IFRS S2—which require companies to disclose sustainability-related financial information and climate risks in response to investor demand.
Since 2023, Taiwan has actively aligned with IFRS S1 and S2 to improve the international comparability of corporate disclosures and strengthen its capital market competitiveness. This marks a critical step forward in advancing corporate sustainability.
More than 30 jurisdictions—including Australia, China, Japan,and Thailand—have adopted or are in the process of developing IFRS sustainability standards.
In Taiwan, the Financial Supervisory Commission (FSC) established a dedicated task force in 2023 to translate the standards, conduct gap analyses, develop pilot examples, and organize consultation sessions. Beginning in 2026, large listed companies with paid-in capital exceeding NT$10 billion will be required to disclose sustainability information in accordance with IFRS S1 and S2.
The implementation will be phased in over three years, progressively integrating sustainability disclosures into annual reports. This process encourages companies to enhance internal processes, strengthen data governance, and foster cross-departmental collaboration to ensure compliance with governance and resource allocation requirements. Full adoption is expected by 2028.
Implementation timeline:
The FSC also allows flexibility for certain exemptions, recognizing that companies are at different stages of development.
Established in 2001, the IFRS Foundation aims to create globally consistent standards for financial reporting and sustainability disclosure, enhancing transparency, accountability, and efficiency in financial markets.
The Foundation oversees two key standard-setting bodies:
International Accounting Standards Board (IASB): Responsible for IFRS Accounting StandardsInternational Sustainability Standards Board (ISSB): Responsible for IFRS Sustainability Disclosure Standards (e.g., IFRS S1 and S2)
The ISSB was founded in 2021 to unify the fragmented landscape of sustainability reporting standards and promote financially relevant sustainability disclosures.
In June 2023, the ISSB officially released IFRS S1 “General Requirements for Disclosure of Sustainability-related Financial Information” and IFRS S2 “Climate-related Disclosures,” both effective from January 1, 2024.
These two standards formally integrate sustainability information into the core of corporate financial disclosure.
IFRS S1 establishes a unified baseline for cross-industry and cross-topic sustainability reporting, requiring companies to present all material sustainability risks and opportunities in connection with their financial statements.
IFRS S2 focuses on climate-related disclosures, building upon the Task Force on Climate-related Financial Disclosures (TCFD) framework with four core elements: governance, strategy, risk management, and metrics & targets. It further strengthens requirements for scenario analysis and Scope 3 emissions reporting.
The Task Force on Climate-related Financial Disclosures (TCFD), established by the Financial Stability Board in 2015, provides voluntary recommendations for consistent climate-related financial disclosures.
Its framework helps companies and investors understand climate risks and opportunities by emphasizing four pillars—governance,strategy,risk management,and metrics & targets—while distinguishing between transition and physical risks. This enables stakeholders to assess how well organizations are prepared for climate challenges.
Organizations often face multiple challenges when adopting the IFRS Sustainability Disclosure Standards:
Defining Reporting Boundaries: Sustainability disclosures must align with the same reporting boundaries and assumptions as financial statements, posing integration challenges.
Lack of Integration Between Financial and Non-financial Data: Many companies still manage sustainability and financial data separately, lacking a unified data governance platform, which undermines consistency and accuracy.
Double Materiality Assessment: Companies must evaluate sustainability impacts from both financial and non-financial perspectives, translating qualitative ESG factors into quantifiable financial indicators—often requiring extensive cross-functional collaboration.
Incomplete Carbon Data Collection: Ensuring the completeness of carbon emission data, especially for Scope 3 across the value chain, remains difficult due to fragmented data sources and varying data quality.
Overlapping Standards: Multiple global frameworks—such as GRI, TCFD, SASB, and the EU’s CSRD/ESRS—have differing disclosure requirements and definitions of materiality. Without proper alignment, companies risk redundant work and increased reporting costs.
To prepare for IFRS S1 and S2, companies can take a structured approach across four key areas:
Gap Analysis: Assess current sustainability disclosures against IFRS S1/S2 requirements to identify missing information, evaluate data integrity, and develop an action plan to close gaps.
Governance and Internal Controls: Embed ESG into board and management decision-making processes, integrate sustainability risk management into enterprise risk frameworks, and establish internal review mechanisms to ensure data reliability.
Capability Building: Strengthen cross-departmental collaboration and provide training for finance and sustainability teams to improve their ability to assess ESG risks through a financial lens and make evidence-based decisions.
Data Solutions: Develop integrated data platforms aligned with IFRS sustainability standards, enhancing data collection, validation, and reporting through automation and intelligent technologies
Delta is developing a comprehensive automated system to support IFRS S1 and S2 compliance.
The solution covers the full lifecycle of sustainability disclosure—from data collection and integration, quality control, and content management to risk assessment, scenario modeling, compliance monitoring, and stakeholder engagement.
By connecting internal and external data sources such as energy consumption, carbon emissions, and financial systems, the platform enables real-time data consolidation and automated reporting aligned with IFRS standards.
Built-in scenario analysis and financial impact assessment tools help quantify sustainability risks, while compliance dashboards track regulatory updates and audit progress.
Through this integrated platform, companies can improve cross-department collaboration, enhance data accuracy and efficiency, and strengthen overall governance and market competitiveness.
The release of IFRS Sustainability Disclosure Standards marks a turning point where sustainability information is no longer optional but a core component of corporate financial communication and capital market engagement.
Companies that act early will not only meet compliance requirements but also transform sustainability disclosure into a strategic advantage—driving value creation through transparency and resilience.
