Sustainability reporting is ceasing to be a voluntary initiative and becoming part of a business’s financial discipline. The new requirements are based on the international standards IFRS S1 and S2, which Kazakhstan is preparing to implement under a national roadmap. Here we explain what these standards are, who will be affected, what must be disclosed, and how companies can prepare in advance.
What IFRS S1 and S2 Are
IFRS S1 and S2 are the first international financial reporting standards devoted to sustainability. They were issued by the International Sustainability Standards Board (ISSB), the same body behind the IFRS system. The standards took effect globally on January 1, 2024, and are gradually being adopted by jurisdictions around the world.
IFRS S1: General Requirements
S1 sets out the general rules for disclosing material sustainability-related information: which sustainability-related risks and opportunities could affect a company’s cash flows, its access to finance, and its cost of capital in the short, medium, and long term. In essence, it is the framework for all non-financial reporting.
IFRS S2: Climate-Related Disclosures
S2 focuses on climate. A company discloses its climate risks (physical and transition), greenhouse gas emissions (Scopes 1 and 2 and, where material, Scope 3), scenario analysis of its business model’s resilience to climate change, and its climate targets. S2 is applied together with S1.
Why These Standards Matter
The main goal is to give investors, banks, and partners comparable and reliable information on how a company affects the environment and society, and how climate and other sustainability factors affect the company itself. A common international language of disclosure reduces the risk of greenwashing and makes it easier for businesses to access “green” finance and international supply chains.
Implementing IFRS S1 and S2 in Kazakhstan: The Roadmap
In May 2026, Kazakhstan presented its National Roadmap for the implementation of IFRS S1 and S2. The document was prepared with the support of the United Nations Development Programme (UNDP) and funding from the European Union, with substantive responsibility resting with the Ministry of Finance of the Republic of Kazakhstan.
The implementation approach is phased:
- First, amendments are made to accounting legislation, with rules for applying sustainability reporting standards.
- Next, the scope is defined: which sectors and companies fall under the requirements, and by when.
- A transition period is provided so that businesses have time to build data collection and internal processes.
According to the market readiness assessment, readiness is highest among large exchange-listed companies, especially in capital-intensive industries. At the same time, disclosure practices remain uneven: companies use different standards and local approaches, or do not yet publish such reports at all.
Who Will Be Affected First
The exact scope will be set by the roadmap and secondary legislation, but the logic follows typical global practice: large public companies (securities issuers), the quasi-public sector, financial institutions, and large exporters will be the first to fall under the requirements. Small and medium-sized businesses usually join later and in a simplified format. However, preparing early pays off for anyone who works with foreign investors, banks, and buyers, since their ESG disclosure requirements arrive sooner than legislative ones.
What to Disclose: Four Reporting Blocks
The disclosure structure under S1 and S2 is built around four interrelated blocks (based on the TCFD approach):
| Block | What is disclosed |
|---|---|
| Governance | Who in the company is responsible for sustainability and climate issues, and how oversight is organized at the board and management levels |
| Strategy | Which risks and opportunities have been identified, and how they affect the business model, strategy, and financial planning |
| Risk management | How the company identifies, assesses, and manages sustainability and climate risks |
| Metrics & targets | The indicators (including greenhouse gas emissions) and targets used to track progress |
How to Prepare: Step by Step
- Assess readiness. Understand how well current processes and data meet S1/S2 requirements and where the gaps are.
- Set up data collection. Above all, greenhouse gas emissions accounting (Scopes 1 and 2), energy consumption, water use, and waste.
- Assign responsibility. Establish the sustainability function and involve the board of directors.
- ПConduct a risk and opportunity analysis,including climate scenarios.
- Prepare the first report using the four-block structure, with independent data verification where necessary.
Common Challenges
- No systematic collection of emissions and resource consumption data; data is scattered across departments.
- Sustainability is seen as a PR task rather than a matter of finance and strategy.
- Difficulty with Scope 3 (supply chain emissions), which requires data from counterparties.
- Lack of in-house expertise in ISSB standards and calculation methodology.
Where to Start
The best approach is to start not by writing a report but with a sober assessment of the company’s current ESG maturity: what data already exists, which processes are missing, and how close the company is to meeting S1 and S2. This saves resources and sets priorities.
GPI Group specialists help Kazakhstani companies go through this process. A convenient starting point is an ESG maturity diagnostic, which shows gaps in data and processes and produces an action plan for future reporting requirements.
Frequently Asked Questions
What are IFRS S1 and S2 in simple terms?
They are international sustainability reporting standards. S1 sets the general rules for disclosing sustainability-related risks and opportunities, and S2 is devoted to climate and greenhouse gas emissions. They were issued by the ISSB and have applied globally since 2024.
When will IFRS S1 and S2 become mandatory in Kazakhstan?
Implementation is phased. In May 2026, a national roadmap was presented (supported by UNDP and the EU, with the Ministry of Finance of Kazakhstan responsible). First, amendments are made to the accounting law, then sectors, companies, and deadlines are defined. Exact dates will be set by secondary legislation.
Who will be affected first?
As a rule, large public companies (securities issuers), the quasi-public sector, financial institutions, and large exporters. SMEs join later. But companies working with foreign investors and buyers often face the requirement earlier than the legislative deadline.
What is the difference between S1 and S2?
S1 is a general framework for disclosing any material sustainability factors. S2 is a specialized climate standard: climate risks, greenhouse gas emissions, scenario analysis, and targets. S2 is applied together with S1.
What must be disclosed in the report?
Information is disclosed in four blocks: governance (who is responsible), strategy (risks and opportunities and their impact on the business), risk management (how they are managed), and metrics and targets (indicators, including emissions, and target benchmarks).
What are Scope 1, 2, and 3 emissions?
Scope 1 covers a company’s direct emissions, Scope 2 covers indirect emissions from purchased energy, and Scope 3 covers all other indirect emissions across the value chain (suppliers, transport, product use). S2 requires disclosure of Scopes 1 and 2 and, where material, Scope 3.
How does GPI Group help with S1 and S2 reporting?
GPI Group advises on the requirements of the standards, helps set up data collection, assess risks, and prepare the report. It’s best to start with an ESG maturity diagnostic to identify gaps and draw up a preparation plan.
