ISSB Amends IFRS S2: Scope 3 & GHG Reliefs for 2027
ISSB Amends IFRS S2: Scope 3 and GHG Reliefs Every GCC Reporter Should Know for 2027
Every bank and insurer in the Gulf that reports under ISSB Standards just had part of its 2027 disclosure load rewritten. On 11 December 2025 the International Sustainability Standards Board (ISSB), the climate-disclosure standard-setter of the IFRS Foundation, issued targeted amendments to IFRS S2 Climate-related Disclosures. The changes narrow what financial institutions must measure under Scope 3, and they give regulators in Qatar, Saudi Arabia, the UAE, and across the region a cleaner path to line up local rules with the global baseline.
The reliefs are real. They are also easy to misread. Limiting Scope 3 does not mean Scope 3 disappears, and an ISSB amendment changes nothing in the GCC until the local regulator adopts it. For a CFO building a 2026 reporting cycle, that gap between global text and local law is exactly where the risk sits.
IFRS S2 is now the anchor for climate disclosure across most major markets. As of 1 January 2026, 21 jurisdictions had adopted the ISSB Standards on a mandatory or voluntary basis, and the jurisdictions moving toward adoption represent more than 60% of global GDP. That is the context for these amendments: a standard already in force in enough of the world that small changes ripple widely. This is not a GCC-only story either. The same reliefs reach reporters under Australia's AASB S2 and Pakistan's SECP mandate, and this article covers all three.
Source: S&P Global Sustainable1, “Where does the world stand on ISSB adoption?”; ISS-Corporate, November 2025
What the December 2025 Amendments Actually Changed
The ISSB made four targeted changes to the greenhouse gas (GHG) emissions disclosure requirements. All of them sit inside Scope 3, the value-chain emissions category, and most of them matter to banks and insurers specifically.
Scope 3 Category 15 can be limited to financed emissions
Scope 3 Category 15 covers emissions tied to a firm's financial activities. The most significant change lets an entity limit its measurement and disclosure of Category 15 to financed emissions only, meaning the emissions attributable to its loans and investments, plus assets under management for asset managers. Facilitated emissions from investment banking, insurance-associated emissions from underwriting, and emissions from derivatives can now be excluded.
Two conditions come attached. Where a firm applies the relief, it must explain what it has treated as a derivative, and it must disclose the magnitude of the activities it has left out. The amendments also add a mandatory subtotal for financed emissions inside Category 15, so the number investors care about most stays visible.
Source: Grant Thornton, “The ISSB publishes amendments to IFRS S2,” 15 December 2025; ICAEW, 19 December 2025
For most banks this is a narrowing, not a discount. Financed emissions, tracked under the Partnership for Carbon Accounting Financials (PCAF) methodology, already account for more than 95% of a typical financial institution's carbon footprint. The relief removes the hardest-to-measure edges, not the core.
Source: Asuene, “IFRS S2 Update: Scope 3 Reporting Eased for Financial Institutions,” December 2025
Alternative industry classification, beyond GICS
Banks and insurers must disaggregate financed emissions by industry and asset class. IFRS S2 originally forced the use of the Global Industry Classification Standard (GICS) for that breakdown. The amendments now permit alternative classification systems, as long as the entity discloses which one it uses and picks a system that supports comparability across reporters.
Source: FM Magazine (AICPA & CIMA), 11 December 2025
Jurisdictional relief on measurement method and GWP values
GHG emissions are measured under the GHG Protocol Corporate Standard unless a local authority requires a different method. The amendments clarify that this jurisdictional relief applies part by part: only to the portion of the entity subject to the local requirement, not the whole group. A parallel relief now covers global warming potential (GWP) values, the factors used to convert different gases into a single CO2-equivalent figure. Where a regulator or exchange requires GWP values other than the latest Intergovernmental Panel on Climate Change (IPCC) figures, the entity may use those instead.
Source: IFRS Foundation, “Amendments to Greenhouse Gas Emissions Disclosures,” December 2025; PwC, In brief, 17 December 2025
What Scope 3 relief did the ISSB introduce?
The ISSB now lets financial institutions limit Scope 3 Category 15 disclosure to financed emissions, the emissions tied to loans and investments. Facilitated emissions, insurance-associated emissions, and emissions from derivatives can be excluded, with disclosure of what was left out. Financed emissions themselves stay mandatory.
The point of the relief is a cleaner scope boundary and better comparability, not permission to stop measuring. Institutions still explain their methodology, assumptions, and data sources, and they still improve coverage over time. The expectation of transparency did not move.
When Do the IFRS S2 Amendments Take Effect?
The amendments apply to annual reporting periods beginning on or after 1 January 2027, with early application permitted. An entity that adopts early must say so. Until a local regulator brings the amendments into its own framework, GCC reporters keep applying IFRS S2 as their jurisdiction currently requires it.
Source: IFRS Foundation, 11 December 2025
Do not confuse this with first-year comparatives relief
This is where reporters trip. IFRS S2 already carries separate transition reliefs for anyone applying the standard for the first time: no comparative information in the first year, Scope 3 deferred to the second reporting year, and lighter scenario analysis in year one. Those transition reliefs are not the December 2025 amendments. Treating the two as one leads to under-reporting and awkward conversations with your assurance provider.
Source: Terrascope, “Australia's Climate Disclosure Rules,” 2026
How GCC Reporters Are Affected
The Gulf is not one regulatory market. It is six, each on its own timeline. That matters, because the amendments only reach a company through whichever regulator it answers to.
Source: S&P Global, ISSB adoption, June 2026; KPMG, “Two years in: adoption of the ISSB Standards,” 2025; Anthesis, “Mandatory Sustainability Reporting in the Middle East,” December 2025
Qatar, the first mover, has already used reliefs
Qatar was the first GCC market to adopt the ISSB Standards. The Qatar Financial Centre Regulatory Authority (QFCRA) set its rules in June 2025, and the Qatar Central Bank (QCB) issued a Sustainability Reporting Framework in December 2025, with IFRS S1 and S2 mandatory for banks, insurers, and incorporated companies from January 2026. The QFCRA has already extended some transitional reliefs, including on Scope 3. A Qatari bank preparing its 2026 report should read the amendments as a live planning input, not a distant global update.
Source: S&P Global, ISSB adoption, June 2026
The UAE runs a separate track
The UAE is the exception that proves the rule. The Securities and Commodities Authority (SCA) has required sustainability disclosures from listed entities since 2021, but the UAE Climate Law runs on its own measurement, reporting and verification (MRV) methodology through the Ministry of Climate Change and Environment (MOCCAE), with ISO 14064 as an accepted framework. An IFRS S2 amendment does not touch a MOCCAE obligation. A firm that is IFRS S2 compliant in Qatar is not automatically Climate Law compliant in the UAE, a distinction we set out in our briefing on the
UAE Climate Law GHG reporting deadline for GCC businesses. UAE Scope 3 reporting is anticipated from 2027, though it is not yet fixed in law.
Source: KPMG, ISSB adoption in the UAE, 2025
Saudi Arabia, Bahrain, Oman, and Kuwait are close behind
Saudi Arabia's SOCPA is developing ISSB-aligned standards while Tadawul shifts from guidance toward firmer expectations. Bahrain's Central Bank ESG reporting module is already operational and references TCFD and ISSB. Oman's FSA and Muscat Stock Exchange are phasing disclosure in with growing assurance expectations, and Kuwait's Capital Market Authority is moving on the same path. None of these markets has locked in the December 2025 amendments yet, which is precisely the point: the timeline to watch is your regulator's, not the ISSB's.
Source: Anthesis, Middle East sustainability reporting, December 2025
The Pass-Through Trap: An ISSB Amendment Is Not a Local Rule
Here is the trap most explainers skip. The ISSB sets the baseline. Each jurisdiction decides whether, when, and how to fold an amendment into local law. So the December 2025 changes only bind a reporter, in the Gulf or anywhere else, once the relevant regulator issues its own adopting instrument.
Adoption is already moving at very different speeds. Australia mirrored the amendments within days. Pakistan will inherit them through its “as issued” adoption of the standards. Most GCC regulators have not moved yet. The section below sets out what that means outside the Gulf, because the same reliefs reach Australia and Pakistan too.
The lesson holds everywhere. Watch your regulator's adoption notice, not just the ISSB press release. A Qatari bank, an Australian insurer, and a Pakistani listed company now read slightly different rulebooks off the same standard, and the difference decides what each discloses in 2027.
Beyond the GCC: What the Amendments Mean for Australia and Pakistan
IFRS S2 is a global baseline, so the December 2025 amendments are not confined to the Gulf. Two of the markets Spectreco works in most closely, Australia and Pakistan, show how the same reliefs land under different adoption models.
Australia: AASB S2 already mirrors the amendments
Australia moved faster than any GCC market. The Australian Accounting Standards Board (AASB) issued AASB S2025-1 Amendments to Greenhouse Gas Emissions Disclosures, registered on 17 December 2025, six days after the ISSB. It mirrors the four ISSB changes and applies to annual reporting periods beginning on or after 1 January 2027, with early application from 1 January 2025 permitted. Australian reporting itself is phased across three groups under the Corporations Act: Group 1 from financial years starting 1 January 2025, Group 2 from 1 July 2026, and Group 3 from 1 July 2027.
Source: AASB, AASB S2025-1, December 2025; Terrascope, Australia's Climate Disclosure Rules, 2026
Two Australian specifics matter. Firms reporting under the National Greenhouse and Energy Reporting (NGER) scheme can keep the older IPCC AR5 global warming potential values rather than recalculating under AR6, applying the jurisdictional relief part by part. And because AASB S2 omits the industry-based metrics that IFRS S2 references, meeting the Australian standard does not by itself mean meeting the ISSB one. Australian entities also get the standard first-year transition reliefs: no comparatives in year one and Scope 3 deferred to the second reporting year.
Source: AASB, AASB S2 Amendments FAQs
Pakistan: SECP inherits the amendments through “as issued” adoption
Pakistan sits at the other end of the adoption spectrum. The Securities and Exchange Commission of Pakistan (SECP) adopts IFRS S1 and S2 as issued by the ISSB, phased across very large, large, and remaining listed and public-interest entities through 2027, with external assurance required from the second year of reporting. Because Pakistan adopts the standards as issued rather than rewriting them locally, the amendments generally flow through to Pakistani reporters once SECP references the updated text, without a separate local rewrite of each change.
Source: IFRS Foundation, Pakistan jurisdictional profile; S&P Global, ISSB adoption, 2025
For a group with entities in the Gulf, Australia, and Pakistan, this is the practical takeaway: one ISSB amendment, three adoption mechanics, and three sets of fine print. Map the obligation per regulator rather than assuming the global text applies uniformly.
What GCC Banks and Insurers Should Do Now
Five steps, in order, for any GCC financial institution reporting under an ISSB-aligned framework.
- Confirm your regulator's version. Check whether the QFCRA, QCB, SCA, SOCPA, CBB, FSA, or CMA has incorporated the December 2025 amendments, and from which reporting period.
- Set your Scope 3 Category 15 boundary. If you are a bank or insurer, decide now whether you will limit disclosure to financed emissions, and document what you exclude and why.
- Fix your classification system. Choose GICS or a defensible alternative, apply it consistently, and disclose the choice.
- Map GWP and measurement method by entity. Apply jurisdictional relief only to the part of the entity subject to the local requirement, and keep the audit trail.
- Build one data source, many reports. Feed financed emissions, any local MRV submission, and investor reports from a single dataset rather than rebuilding each in a spreadsheet. Spectreco's cloud-native ESG platform maps data once and reuses it across ISSB, MOCCAE MRV, and investor frameworks, and our Virtual Sustainability Office runs the reporting cycle for teams without the headcount to do it in-house.
Frequently Asked Questions (FAQs)
Report Once, Satisfy Every GCC Regulator
The firms that handle 2027 well are the ones treating GHG data as a shared asset across jurisdictions, not a separate build for each deadline. Spectreco works with banks, insurers, and real estate groups across the GCC to line up IFRS S2 disclosure, MOCCAE MRV submissions, and investor reporting from one source of data. Book a 30-minute GCC compliance gap assessment through our Compliance, Reporting and Disclosures advisory team, or explore how our Climate and Green Finance practice ties credible disclosure to capital-market access as GCC sustainable bond issuance heads toward USD 20 to 25 billion in 2026.
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