IFRS S1: The general standard for sustainability disclosure

IFRS S1 is the first international standard issued by the International Sustainability Standards Board (ISSB), focused on disclosing sustainability-related information that is relevant to financial markets.

Its aim is to standardise how companies report the way environmental, social and governance (ESG) factors affect their finances and operations, helping investors, banks and other key stakeholders make informed decisions.

What is IFRS S1?

IFRS S1, published in June 2023 by the ISSB (a body of the IFRS Foundation), sets the general requirements for disclosing sustainability-related financial information. It is a cross-cutting standard, which means it covers all ESG topics that could have a significant effect on an entity's financial position, performance or value.

Its purpose is not to replace traditional financial reports but to complement them with sustainability information that is relevant to users of the capital markets. It applies to annual reporting periods beginning on or after 1 January 2024 in the jurisdictions that adopt it.

Key components of IFRS S1

IFRS S1 follows the four-pillar structure popularised by the TCFD. It is worth being precise here: the TCFD is no longer an active, standalone framework. Its task force was disbanded in 2023 and monitoring of its recommendations passed to the IFRS Foundation, which folded them into IFRS S2. The four pillars are:

1. Governance: how the board and management oversee sustainability-related risks and opportunities.
2. Strategy: how those risks and opportunities affect the business model, strategy and financial planning.
3. Risk management: the processes used to identify, assess and manage sustainability-related risks.
4. Metrics and targets: the indicators and goals used to measure and manage performance.

A central principle is financial materiality: only sustainability topics that could affect the entity's value in the short, medium or long term need to be disclosed. The standard also promotes connectivity between sustainability information and the financial statements prepared under IFRS or, in Mexico, the NIF.

IFRS S1 and IFRS S2

IFRS S1 sets the general baseline and is designed to be applied together with IFRS S2, which addresses climate-related disclosures specifically. Together they form the ISSB's global baseline for sustainability reporting, which many jurisdictions are adopting or referencing.

Adoption in Mexico: already mandatory

Mexico was the first country in North America to make the ISSB standards mandatory, and the obligation is already in force. The Comisión Nacional Bancaria y de Valores (CNBV) requires listed issuers, with some exceptions, to produce a Sustainability Report under IFRS S1 and IFRS S2, filed in 2026 covering financial year 2025. We go through the detail in our article on IFRS S1 and S2 becoming mandatory for Mexican issuers in 2026.

Why it matters for companies

Beyond the companies already in scope, aligning with IFRS S1 offers several benefits:

• It strengthens the confidence of investors who require clear, comparable information on non-financial risks.
• It helps position a company in international value chains, especially in sectors such as manufacturing, energy, exports and technology.
• It anticipates future national and international ESG disclosure regulation.
• It eases access to green or sustainable finance.

Compatibility with Mexico's NIS

For companies that are not listed issuers and report under the NIF, the Consejo Mexicano de Normas de Información Financiera (CINIF) has developed the Normas de Información de Sostenibilidad (NIS), such as NIS A-1 (conceptual framework) and NIS B-1 (basic indicators), which are aligned with the principles of IFRS S1 and S2 but simplified. This compatibility lets Mexican organisations adopt international good practice gradually and in their own context.

A standard for sustainability reporting

IFRS S1 is a key standard for understanding how sustainability topics affect the value of companies in today's economy. Adopting it, whether by obligation or voluntarily, can improve competitiveness, access to capital and corporate reputation. At Manglai we help companies measure their carbon footprint and prepare sustainability reporting aligned with frameworks such as the ISSB standards. Discover how Manglai can help you.