IFRS S2: what changes for Brazilian companies
After CVM 244, adopting IFRS S2 became voluntary again in Brazil. Understand the standard, what to report, the expected deadlines, and why continuing to prepare still makes sense without a mandate.
What IFRS S2 is
IFRS S2 is the international standard for disclosing climate-related financial information, published by the ISSB (International Sustainability Standards Board) in June 2023. It replaces and extends TCFD, requiring companies to report physical and transition climate risks, GHG emission metrics (Scopes 1, 2 and 3) and decarbonization targets, all in a format that fits into the annual financial report.
The difference from earlier frameworks (CDP, GRI) is that IFRS S2 treats climate as a financial matter, not as an isolated sustainability topic. The disclosure goes alongside the financial statements, is audited by an external auditor, and follows the same accounting principles of materiality and prudence.
Why this matters in Brazil
The CVM published Resolution 193/2023, adopting IFRS S2 for Brazilian listed companies, mandatory from financial year 2026. CVM Resolution 244 revised that timetable and made adoption voluntary, matching the market's pace and giving companies more time to prepare.
Even as a voluntary standard, IFRS S2 remains the reference. Companies adopting it now gain:
- Access to ESG capital: international funds and banks use IFRS S2 as the common vocabulary of climate disclosure.
- Supply chain pressure: European clients under CSRD will require structured Scope 3, and IFRS S2 delivers it.
- Reputational advantage: being an early adopter signals real ESG maturity rather than reactive compliance.
- Ready for the next regulatory round: regulation tends to come back, and whoever already has the base does not have to rush.
What has to be in the report
IFRS S2 organises disclosure into four structural blocks:
Governance
How the board oversees climate risks and opportunities:
- An existing committee (ESG, sustainability, risk) with an explicit climate mandate.
- How often it is discussed, evidenced in minutes.
- The climate competencies of board members.
- Whether climate targets are linked to executive pay.
Strategy
The climate scenarios analysed and the financial impacts estimated:
- At least one 1.5°C-aligned scenario and one 2°C+ or inaction scenario.
- Short (to 2030), medium (2030-2040) and long (2040+) horizons.
- Quantitative impacts on revenue, cost, capex and asset value.
- The resilience of the strategy under each scenario.
Risk management
How climate risks are identified, assessed and mitigated:
- Formalised processes, integrated into the general risk framework.
- Physical risks (acute: flood, drought, extreme heat / chronic: rising average temperature) and transition risks (regulatory, technological, market, reputational).
- Quantitative materiality, not only qualitative.
Metrics and targets
Absolute emissions across the three scopes, intensity, SBTi-aligned targets:
- Scope 1, Scope 2 (location-based and market-based) and Scope 3 by category.
- Intensity (tCO₂e per relevant unit: revenue, product, m², employee).
- Absolute, science-based targets, with a base year, a target year and a percentage.
- Progress against the target in the reporting period.
- The volume and type of carbon credits used, if any.
The most common first-submission mistakes
- Reporting Scope 3 with no traceability. The auditor will ask for the primary data, the methodology and the improvement plan. An estimate with no methodological documentation is close to an automatic fail.
- Confusing IFRS S2 with the GHG inventory. The inventory is the base; S2 is the strategic report that rests on it. A company without a verified inventory cannot report S2 with any quality.
- Leaving it to the last minute. Companies that started in 2024-2025 are ahead. Doing the first cycle in 3 months is a recipe for errors.
- Not involving finance and legal. S2 is financial disclosure; it has to go through the CFO, internal audit and legal before publication.
- Treating scenario analysis as an academic exercise. The numbers have to be auditable with defensible assumptions. A scenario saying "we will lose BRL X in 2050" with no modelling is worse than no scenario at all.
Suggested operational calendar
For a company starting to prepare now (April 2026) with the 2026 financial year report in view:
| Month | Activity |
|---|---|
| Apr-May 2026 | Gap diagnosis; identifying missing data; mapping priority suppliers for Scope 3 |
| Jun-Jul 2026 | Scope 1+2 data collection; preliminary scenario analysis; first documented governance draft |
| Aug-Sep 2026 | Intensive Scope 3 collection; inventory calculation; target setting |
| Oct-Nov 2026 | Independent verification (limited assurance); final adjustments |
| Dec 2026 | Closing the year's inventory; final drafting of the report |
| Jan-Mar 2027 | Integration into the annual report; board approval; publication |
How Mangue helps
The platform already delivers data structured in the format IFRS S2 requires, with a field-level audit trail (source, factor, version, owner). The consulting delivers climate scenario analysis, financial impact modelling and a strategic narrative ready for verification.
We have supported more than 20 Brazilian listed companies through the TCFD to IFRS S2 transition, with a first submission free of material qualifications in 100% of cases.
- Start with a complete, auditable GHG inventory (Scopes 1, 2 and 3); without it, IFRS S2 does not close.
- Document a climate scenario analysis (at least one 1.5°C scenario and one 2°C+ scenario) with estimated financial impacts.
- Set up formal governance: climate oversight has to be documented in board minutes.
- Plan independent verification: limited assurance in the first year, reasonable assurance from the second.
- Integrate IFRS S2 reporting with CDP and CSRD to avoid duplicated work and inconsistency between channels.
Perguntas frequentes
Who has to report IFRS S2 in Brazil?+
After CVM 244 (the revision of CVM 193), adoption is voluntary. Listed companies may choose to adopt it as best practice. Companies under market pressure (a bank, a fund, international partners, or supplying European clients) frequently adopt voluntarily to access ESG capital and the global supply chain.
What is the difference between IFRS S1 and IFRS S2?+
S1 is the general standard for sustainability-related financial disclosures (any material topic: climate, biodiversity, human capital and so on). S2 is climate-specific and carries detailed requirements on emissions, scenarios and targets. In Brazil, after CVM 244, both are voluntary, but they remain the reference standard for reporting to investors.
Do I need an external audit of the report?+
When a company chooses to adopt IFRS S2 and publish the report, verification by an accredited third party is strongly recommended to give the market confidence. Limited assurance in the first cycle, progressing to reasonable assurance as maturity grows. Auditors such as KPMG, EY, PwC and Deloitte have already built dedicated IFRS S2 practices.
How do I report Scope 3 when I have no primary data?+
Use spend-based or activity-based as the initial baseline and document the plan to move to primary data. IFRS S2 accepts initial estimates as long as the methodology, assumptions and improvement plan are transparent. An auditor will not fail a well-documented estimate; they will fail opaque data.
Are IFRS S2 and CSRD the same standard?+
No. CSRD uses the ESRS (with 12 thematic standards) and requires double materiality (impact plus financial). IFRS S2 is financial only and climate only. For a Brazilian company with EU operations, CSRD may be mandatory over there, while IFRS S2 stays voluntary in Brazil; interoperability exists but is not automatic.
- IFRS S2
- The international standard for climate-related financial disclosure published by the ISSB in June 2023. It replaces and extends TCFD.
- ISSB
- International Sustainability Standards Board. The IFRS Foundation body that issues the S1 (general) and S2 (climate) standards.
- TCFD
- Task Force on Climate-related Financial Disclosures. The earlier FSB framework, wound down in 2024 with migration to IFRS S2.
- CVM Resolution 193/2023 (and CVM 244)
- CVM 193 originally adopted the IFRS S1 and S2 standards for Brazilian listed companies, mandatory from 2026. CVM 244 revised that timetable and made adoption voluntary. The standard remains the recommended reference.
- Limited assurance
- The initial level of verification by an external auditor. Equivalent to "nothing came to our attention to the contrary".
- Reasonable assurance
- A more robust level of verification, with depth equivalent to the audit of financial statements.
- Scenario analysis
- A strategic exercise modelling the company's financial impact under different climate pathways (1.5°C, 2°C, 3°C+).
- Double materiality
- The CSRD/ESRS principle: a company reports both the impact of climate on the business and the impact of the business on climate. IFRS S2 requires only the first.
- IFRS S2 Climate-related Disclosures · IFRS Foundation · ISSB
- IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information · IFRS Foundation · ISSB
- Resolução CVM 193, de 11 de outubro de 2023 · Comissão de Valores Mobiliários
- Resolução CVM 244 · Comissão de Valores Mobiliários
Frameworks mencionados neste artigo
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