How much climate scenario analysis does IFRS S2 expect from a small or first-time reporter?

IFRS S2 expects scenario analysis proportionate to your circumstances: use reasonable and supportable information you can get without undue cost or effort, and match the approach to your skills, capabilities and resources. A small or first-time reporter can start qualitatively or with simple single-variable tests, but it must still assess resilience and disclose how.

The two factors that set your approach

IFRS S2's application guidance (paragraphs B1 to B18) asks you to weigh two things. First, your exposure to climate-related risks and opportunities: high exposure calls for more quantitative analysis. Second, the skills, capabilities and resources you have: a company without modelling staff is not expected to build models. As exposure or capability grows, the analysis is expected to deepen over time.

What every reporter still has to disclose

• Your assessment of climate resilience at the reporting date (paragraph 22).
• Which scenarios you used and where they came from.
• Whether one of them is aligned with the latest international agreement on climate change.
• The time horizons, the key assumptions and the main inputs.
• Why you judged the scenarios you chose relevant to your climate risks.

A proportionate first year

1. List your sites, main products and main markets.
2. Pick two contrasting published scenarios, one orderly transition and one high warming, and write a short narrative of what each means for costs, demand and sites.
3. Run one or two simple quantitative tests: a carbon price on your Scope 1 and 2 emissions, and the main physical hazard at each site.
4. Write down limitations and what you will add next year.

Status in India

India has not made IFRS S2 mandatory as of this review; listed companies report through SEBI's BRSR. The question arises for Indian subsidiaries of groups reporting under IFRS S2 or a local version of it, and for companies reporting voluntarily. A parent may impose its own method; follow it where it does.

Worked example: one carbon price test (illustrative)

• Scope 1 and 2: 2,000 t CO2 a year
• Assumed carbon price in an orderly scenario by 2030: ₹2,000 per t
• Cost if fully borne: 2,000 x 2,000 = ₹40,00,000 a year
• Against an EBITDA of ₹4 crore, that is 10% of EBITDA

The price and EBITDA are assumptions for illustration. Take the carbon price path from the scenario you name and state its source.

What Senseible does here

Senseible does not run climate scenario analysis. Its Scope 1 and 2 figures from your bills are the base emissions you would apply a scenario carbon price to.

• Which NGFS scenario should I use?
• Does IFRS S2 apply in India?
• Climate risk
• Carbon pricing impact calculator

Sources: IFRS S2 Climate-related Disclosures (2023), paragraph 22 and paragraphs B1 to B18 (ifrs.org), ISSB educational material on climate-related scenario analysis (ifrs.org)

Last reviewed 2026-10-18. India has not mandated IFRS S2 at this review; check for any adoption by Indian regulators.