Application of IFRS S2 in Disclosing the Impact of Climate Change for Consumer Goods Companies

Abstract

Climate change is a growing global issue that increasingly affects the operations and sustainability of companies, including those in the consumer goods sector which typically have complex supply chains and significant emissions. Climate change presents a major challenge influencing companies worldwide, including those operating in Indonesia. One of the international standards governing the disclosure of climate change impacts in corporate financial reports is IFRS S2. The IFRS S2 sustainability reporting standard, issued by the International Sustainability Standards Board (ISSB), is designed to enhance the transparency and consistency of disclosures related to climate risks and opportunities. This article analyses the application of IFRS S2 in disclosing climate change risk using PT. Unilever Indonesia Tbk as a case study for the years 2022 and 2023. The research aims to analyse the implementation of IFRS S2 in disclosing the impact of climate change on consumer goods companies, and to assess the readiness and challenges encountered in its implementation. Through a qualitative approach, this article explores the challenges companies face in implementing climate change disclosure and the opportunities that can be gained from higher transparency. The results indicate that although there are challenges in data collection and physical risk measurement, the adoption of IFRS S2 has helped Unilever Indonesia enhance its sustainability reputation and attract the attention of sustainability-focused investors.