Foundations: Fair Presentation, Materiality, and Connected Information

IFRS S1 anchors sustainability disclosures around three principles: fair presentation, materiality, and connected information. Fair presentation isn’t about perfect accuracy—it’s about whether your narrative reflects substance. Materiality focuses on whether sustainability issues could reasonably affect prospects—revenue, costs, valuation, or access to capital. Connected information ensures disclosures aren’t siloed: risks, responses, and metrics must be woven into the company’s strategy, business model, and financial planning.

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These principles shift disclosure from passive reporting to a forward-leaning diagnostic tool.

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Mapping What Matters

Disclosure Mapping begins with strategic judgment—what issues can move the needle on enterprise value, and how? IFRS S1 expects firms to avoid templated checklists. Instead, it calls for mapping issues based on business-specific exposure, using a blend of external context and internal vulnerability. Governance oversight, risk controls, and strategic alignment form the backbone.

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Once identified, issues must be translated into measurable signals. This doesn't demand precision in every data point—but it does require directionally sound estimates. If a risk could hit revenue by 5–10%, or delay asset recovery by a year, say so. What matters is scale, causality, and how it impacts outlook.

 

From Data to Strategic Insight

Data is only valuable if it improves decisions. IFRS S1 compels firms to build data flows that capture, interpret, and link sustainability factors to the enterprise’s forward arc—whether that’s cost of capital, margin compression, or asset stranding.

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A robust system must convert even rough estimates into usable intelligence. Clarity on methods, not just metrics, builds investor confidence. Paragraph 51 demand narrative coherence: does what you disclose align with what you do—and what you say you’ll do next?

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IFRS S2: Climate as a Strategic Pressure Test

IFRS S2 narrows the lens to climate-related risks and opportunities—but widens the expectation on foresight. It requires disclosures on physical and transition risks (para 3), resilience across climate scenarios (para 22), and GHG metrics including Scope 3 (para 29).
 

Critically, S2 demands climate data that influences strategy—not just describes exposure. Transition plans must show how climate paths will reshape operations, investment, or competitiveness. Scenario analysis isn’t about accuracy—it’s about surfacing plausible risk paths and showing how management responds.
 

Climate disclosures must connect dots: from carbon risk to capital planning, from energy transition to operating model shifts. Even directional GHG projections are powerful when used to guide investment choices or procurement strategies.

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From Compliance to Competitive Signal

When applied effectively, IFRS S1 and S2 turn sustainability disclosure into a strategic signal. They reveal whether a company has the ability—not just the language—to detect, interpret, and act on sustainability-linked risks.

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Fair presentation ensures honesty. Materiality ensures relevance. Connected information ensures coherence. Disclosure Mapping is no longer just about what happened—it’s about what’s coming, and whether your organisation is ready for it.