ISSB Standards in Practice: The Fintech CFO's Sustainability Reporting Baseline

Where the Standards Sit in Mid-2026

The ISSB (International Sustainability Standards Board) is the sister body of the IASB within the IFRS Foundation. IFRS S1 and IFRS S2 were issued in June 2023 as the first two sustainability reporting standards. They are structured to sit alongside financial statements and to be published concurrently, using the same reporting boundary, the same materiality lens, and the same commitment to comparability.

The UK's adoption process runs through HMT and the Department for Business and Trade (DBT), advised by the UK Sustainability Disclosure Technical Advisory Committee (TAC), which reviews the standards and recommends any UK-specific modifications before they become the UK Sustainability Reporting Standards (UK SRS). The consultation process ran through 2024 and 2025, and adoption is progressing toward a mandatory application regime for larger UK companies. Application to smaller companies is expected to follow on a phased basis.

Meanwhile, TCFD reporting obligations — which have been mandatory for UK premium-listed PLCs and larger private companies since 2022 — are being subsumed into IFRS S2. Firms with existing TCFD-aligned reporting have a materially easier transition path.

The Disclosure Architecture

Both IFRS S1 and IFRS S2 follow the same four-pillar structure familiar from TCFD:

1. Governance. The governance processes, controls and procedures used to monitor and manage sustainability-related risks and opportunities. Named board and management responsibilities.
2. Strategy. The strategy for managing sustainability-related risks and opportunities that could reasonably be expected to affect prospects. Scenario analysis. Financial planning implications.
3. Risk management. The processes used to identify, assess, prioritise and monitor sustainability risks. Integration into overall risk management.
4. Metrics and targets. The metrics and targets used to measure and manage sustainability-related risks and opportunities. Historical data, forward-looking targets, methodology.

IFRS S1 is the general framework — applied to all sustainability-related risks and opportunities that could reasonably affect prospects. IFRS S2 is the climate-specific application, with additional required metrics including Scope 1, Scope 2 and Scope 3 greenhouse gas emissions.

The Scope 3 Problem

Scope 3 emissions — the emissions across the value chain outside the reporting company's direct operations and purchased energy — are the single most difficult area for most firms. The scope covers fifteen categories under the GHG Protocol, including purchased goods and services, upstream and downstream transportation, capital goods, waste, business travel, employee commuting, use of sold products, and — for financial institutions — financed emissions (category 15).

For a typical fintech, three categories dominate:

• Purchased goods and services (category 1). Software vendors, cloud infrastructure, professional services. Usually estimated using spend-based methodology in the first year, refined with supplier-specific data in subsequent years.
• Business travel (category 6). Air, rail, and hotel. Reasonably straightforward to measure once travel data is centralised.
• Financed emissions (category 15). For lending fintechs, credit fintechs, insurance fintechs and investment platforms, the emissions associated with the products or portfolios financed. This is typically the largest category by a wide margin and the hardest to measure.

The Cloud Emissions Sub-Problem

For fintechs, cloud infrastructure is often a material Scope 3 category 1 line — and increasingly, given the rise of AI inference workloads, a material line specifically to disclose. The major hyperscalers publish emissions data through customer-facing tools, but the granularity and methodology vary. Three practical points:

• Region matters. A given workload run in a low-carbon-electricity region has materially lower emissions than the same workload in a higher-carbon region. Region choice is now a disclosure-relevant decision.
• AI inference is a new pressure point. Model inference at scale can materially move the emissions line. Firms with meaningful AI use in production need to include inference emissions in the disclosure, and increasingly, in the internal cost model.
• Renewable energy claims should be scrutinised. "Powered by renewables" claims by hyperscalers use varying methodologies. Consistent methodology across periods matters more than the absolute number for the first cycle of reporting.

The UK Timeline and What to Do Now

UK SRS mandatory adoption for large UK companies is expected to phase in through 2026 and 2027, with smaller companies following. Even before mandatory application, the following firms should be doing the work:

• Any UK company with financial year-end 31 December that has already been publishing TCFD disclosures — the transition to IFRS S2 is manageable if the existing disclosure is substantive.
• Any fintech pursuing Series B or later fundraising — investor diligence increasingly asks for the sustainability data even before it is mandatory.
• Any fintech supplying enterprise customers who themselves have adopted or are adopting the standards — the customer will ask for the emissions data from your supplier side (their scope 3 category 1 from your operations).

The CFO Checklist

Twelve months of work to reach a defensible first disclosure:

Key Takeaways

• IFRS S1 and IFRS S2 were issued by the ISSB in June 2023, effective from reporting periods beginning on or after 1 January 2024.
• UK adoption is progressing as the UK Sustainability Reporting Standards (UK SRS), with phased mandatory application expected for large companies followed by smaller companies.
• TCFD reporting is being subsumed into IFRS S2. Firms with existing TCFD-aligned disclosure have a material head start.
• The four-pillar disclosure architecture (governance, strategy, risk management, metrics and targets) is the same across TCFD, IFRS S1 and IFRS S2.
• Scope 3 emissions are the hardest part. For fintechs, three GHG Protocol categories typically dominate: purchased goods and services (cloud, software), business travel, and financed emissions (for lending, credit, insurance and investment platforms).
• Financed emissions use PCAF methodology with data quality scores from 1 (best) to 5 (worst). Most firms start at 4 or 5 and improve over three reporting cycles.
• Twelve-month CFO plan: scope 1&2 in months 3-4; scope 3 categories in months 5-6; financed emissions in months 7-8; scenario analysis in months 9-10; disclosure draft in months 11-12.