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The impact of the release of S1 and S2 by the ISSB on the Taiwan Financial Management Commission.

Writer: Rose LIAO, Vivian CHUANG

Social Media Team: Irina LIN




ISSB issues inaugural global sustainability disclosure standards: IFRS S1 and S2

The International Sustainability Standards Board (ISSB) has released its first-ever standards, namely IFRS S1 and IFRS S2, marking the beginning of a new era for sustainability-related disclosures in global capital markets and officially published in June 2023. These standards aim to enhance trust and assurance in companies' sustainability disclosures, providing essential information for making informed investment choices. Both S1 and S2 standards fully integrate the recommendations put forth by the Task Force on Climate-related Financial Disclosures (TCFD).

Major Issues Promoted by ISSB

  1. Development of Uniformity Standards: developing standards for a global baseline ofzsustainability disclosures;

  2. Sufficient disclosure information: meeting the information needs of investors;

  3. Transparent Sustainability Program Revealed: enable companies to provide comprehensive sustainability information to global capital markets; and

  4. Focus on interactions with stakeholders: facilitating interoperability with disclosures that are jurisdiction-specific and/or aimed at broader stakeholder groups.

Difference between IFRS S1 and S2

S1 emphasizes the linkage between sustainability information and financial statement information (including the reporting of individuals, materiality standards, and material assumptions that are consistent with the financial statements) and the need for sustainability information to be reported simultaneously with the financial statements, so as to facilitate investors' overall consideration of corporate value in their investment decisions; S2 integrates the relevant recommendations of the Task Force on Climate-related Financial Disclosure (TCFD), and strengthens the disclosure of restructuring plans, climate resilience, and GHG emissions, and also incorporates indicators for industry disclosure.

The Taiwan Financial Supervisory Commission (TFSC)'s attitude towards the ISSB's new guidelines

Currently, the TFSC has preliminarily indicated that it will follow the schedule set out in the "Action Plan for the Sustainable Development of Listed Counterparties" for the time being, and will make assessment and adjustment after 2025. In the first stage, a total of 83 listed counter companies with a capital of 10 billion NTD will compile sustainable information in 2026 and disclose it to the public in 2027.

The existing TFSC only requires companies to disclose their own GHG emissions then the scope only need to cover to scope 1 (directly emissions) and 2 (in-directly emissions), and not required to deal with environmental impact and prevention, subsequent risk management and assessment.

Immediate Challenges for Taiwan's FSC if it Fully Complies with S1 and S2


  1. Difference in GHG inventory scope: The inventory of IFRS S1 and IFRS S2’s scope includes scopes 1, 2, and 3 reports with a third party’s validation statement. However, TFSC only need to report scope 1 and 2 with a third party’s assurance report.

  2. Framework and requirements: IFRS S1 and IFRS S2 focus more on "management and strategies in the face of climate change risks", while Taiwan's FSC only requires "disclosure of GHG emissions".

For those enterprises that don’t yet have experience in publishing sustainability reports, or that haven’t yet conducted ESG information gathering, risk identification, and climate resilience assessments, future operational risks will be elevated and will be the next topic of discussion at senior executive meetings.

Taiwan’s FSC is planning to gradually integrate international standards with the local system, however, in the short term, it will still conduct supervision in accordance with the issued guidelines. Ref .


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