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

Canonical: https://senseible.earth/answers/ifrs-s2-scenario-analysis-small-company

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?](https://senseible.earth/answers/which-ngfs-scenario-should-i-use)
- [Does IFRS S2 apply in India?](https://senseible.earth/answers/does-ifrs-s2-apply-in-india)
- [Climate risk](https://senseible.earth/climate-risk)
- [Carbon pricing impact calculator](https://senseible.earth/calculators/carbon-pricing-impact)

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

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