Sustainability Performance Audit under IFRS-S2

Abstract

This research aims to highlight the importance of auditing sustainability performance considering global environmental changes. This research examines the international standard IFRS S2, issued by the International Sustainability Standards Board (ISSB), part of the International Financial Reporting Standards Foundation (IFRS). This standard responds to the challenges posed by climate risks, focusing on disclosing how these climate risks and opportunities impact financial performance, strategy, governance, and risk management within organizations. The research addresses the extent to which the current audit environment is prepared to accommodate the requirements for auditing climate disclosures, and the need for new tools and standards to support the reliability and credibility of these disclosures. The research used a descriptive analytical approach to analyze the content of the standard and the literature on sustainability disclosure, with a comparative study between international disclosure environments and traditional audit requirements. The research concludes that auditing climate disclosures according to IFRS S2 requires extensive professional and normative development, including building auditor capacity, developing risk assessment models, and improving the infrastructure for non-financial information. It also recommends the adoption of specialized audit standards that address the gap between financial and sustainability auditing.