One Year In: How Companies Are Navigating IFRS Sustainability Reporting

As 2025 marks the first full year of reporting under the IFRS Sustainability Disclosure Standards—IFRS S1 and S2—companies worldwide are adapting to a new global baseline for sustainability disclosures. These standards, developed by the International Sustainability Standards Board (ISSB), aim to provide consistent, investor-focused information on sustainability-related risks and opportunities.

Although these standards are currently voluntary, many jurisdictions are moving toward mandatory adoption. Governments and regulators in regions like the United Kingdom, Canada, and Australia have announced plans to align their sustainability reporting requirements with IFRS S1 and S2, with varying effective dates and scopes. We’ve outlined a few of these countries below, including their implementation timelines and the types of entities affected.

*This information is as of 08/31/2025

This article explores the key trends, integration strategies, and best practices emerging from this inaugural reporting cycle.

Key Trends Emerging in 2025

Repositioning GRI in the IFRS reporting landscape

One of the key questions companies have in transitioning to IFRS-aligned reports is if and how they should continue to report against the Global Reporting Initiative (GRI). Rather than replacing GRI, companies are repositioning it: using GRI for impact materiality and IFRS for financial materiality, aligning with the double materiality principle. This dual approach allows organizations to meet the needs of both investors and broader stakeholders.

Aligning with global standards

In parallel, some companies voluntarily incorporate elements of the European Sustainability Reporting Standards (ESRS) into their IFRS reports. This is particularly relevant for businesses with operations or supply chains in the EU, as it helps them prepare for compliance with the Corporate Sustainability Reporting Directive (CSRD).

Streamlining sustainability reporting

To support the onset of these new reporting standards, companies are shifting towards integrated reporting platforms—such as Workiva—that provide data connectivity and streamline reporting processes. Reports are also becoming more modular, often structured around governance, strategy, risk management, metrics, and targets, in line with IFRS S1 and S2.

Early Insights from Voluntary Adoption

The first year of reporting under IFRS S1 and S2 has seen a cautious and gradual uptake.

Among early adopters, most companies are beginning with IFRS S2, which focuses on climate-related disclosures. Implementation typically takes one of two forms:

• Standalone index: Companies add an index or mapping table, often at the end of a sustainability report, or
• Narrative restructuring: Companies reorganize the “Environment” section of sustainability reports or other disclosures around the IFRS pillars: governance, strategy, risk management, and metrics and targets.

Both approaches allow companies to ease into reporting under IFRS S2 without overhauling their entire reporting structure.

In contrast, adoption of IFRS S1 has been limited. Given that it applies to all sustainability-related financial disclosures, integrating IFRS S1 requires a more comprehensive reorganization of information in alignment with the framework’s core pillars. However, broader enactment is expected as jurisdictions such as the UK, Canada, and Australia move toward mandatory adoption.

As we move into the second year of reporting against IFRS, more companies will likely report against IFRS S2 and begin transitioning their full reports to align with IFRS S1. Overall, adoption of IFRS S1 and S2 is growing, especially among large multinational companies and those with investor pressure to align with global financial materiality standards.

Best Practices

To succeed in this new environment, companies should:

• Conduct a double materiality assessment to determine priority topics from an impact and financial perspective to meet the needs of investors and broader stakeholders.
• Align internal systems for data collection and consider using a reporting software platform to support future auditability.
• Use integrated reporting to connect financial and sustainability narratives.
• Prioritize transparency and continuous improvement over perfection.

Conclusion

As 2025 ushers in the first full year of IFRS-aligned sustainability reporting, companies that embrace interoperability, clarity, and early adoption will be best positioned to lead their industries. The shift toward globally consistent, investor-focused disclosures is accelerating, with jurisdictions worldwide moving toward mandatory adoption of IFRS S1 and S2.

To prepare for the next reporting cycle, organizations should begin aligning internal systems, integrating financial and sustainability reporting, and considering the adoption of digital platforms that support audit-ready, modular disclosures.

Sodali & Co is here to help you navigate this transition. Whether you're just beginning your IFRS journey or looking to refine your approach, we offer tailored support to implement these standards effectively and transform regulatory readiness into a strategic edge. If you have questions, please reach out to info@sodali.com.