What are the transition reliefs under IFRS S1 and S2?

May 28, 2026 / Maria Luiza Gonçalves

Starting in 2027, sustainability reporting in Brazil enters a new phase with the mandatory adoption of IFRS S1 and S2 standards for publicly traded companies. In this context, companies will be able to rely on transition relief and proportionality mechanisms, which help them structure their processes gradually. The aim is to support the development of technical and financial capabilities throughout the implementation process.

This was one of the main points discussed in the premiere of the new season of the WayCarbon Talks videocast, which addressed the most pressing questions from organizations that are beginning the reporting process. To this end, WayCarbon’s Head of Consulting and Digital Solutions, Lauro Marins, hosted experts Melina Amoni, Climate Change Manager, and Raissa Urzedo, ESG Strategy Manager.

Transition relief and proportionality

Transition relief applies to the first year of reporting under the standards, whether conducted during the voluntary or mandatory period. Starting with the second report, it can no longer be used.

These criteria establish that:

The entity may choose to disclose only IFRS S2; in this case, IFRS S1 should be applied only as a guide to support climate disclosures;

The organization must explicitly disclose that it has used this relief;

It is possible to defer the disclosure of Scope 3 GHG emissions;

The entity is not required to immediately apply the GHG Protocol if it already uses another consistent method for measuring emissions;

It is not necessary to include comparative information;

The measurement approach may be simplified for areas where the company does not yet have a well-defined control routine.

As for proportionality mechanisms, there are no limitations tied to the first report, but the standard requires progress toward maturity. “Once a company uses a proportionality mechanism, it needs to begin implementing actions so that the mechanism is no longer used and it demonstrates to the market and investors that it is advancing on the agenda in future reporting cycles,” explains Raíssa Urzedo.

The risks of doing “the bare minimum”

Lauro Marins notes that many clients, regardless of their level of maturity, ask what the minimum requirements are for compliance. In this regard, experts point out that there is no officially established minimum, but rather a feasible approach that fits within the organization’s size, structure, and budget.

“In these cases, we assess the client’s context and the use of proportionality mechanisms and transition reliefs that will allow the company to report, as well as what it will need to build to achieve reasonable assurance,” says Urzedo.

To achieve reasonable assurance, an independent auditor must actively affirm that the data possesses a high degree of reliability. This represents a level of rigor beyond limited assurance, in which the auditor merely states the absence of evidence of material misstatement.

Melina Amoni emphasizes that the minimum standard should not be confused with inaction and that the depth of disclosure must be strategic in nature, based on a proportionality approach. “When a company presents information without understanding what it means and acts reactively, it may end up facing reputational risks,” she says.

At this stage of the agenda, the market is already beginning to compare disclosures. Since two companies — Lojas Renner and Vale — disclosed information in accordance with IFRS last year, peer organizations are seeking to match or even surpass them.

In addition to reputational risk, there is a technical risk involved. “If a company chooses to produce a weaker report just to ‘get by’ this year, it will be harder to report on progress next year. This can lead to rework, higher costs, and inconsistencies,” explains Amoni.

Given the imminent rise in standards and maturity, the “bare minimum” may end up costing dearly. The question for companies is not whether they should adapt, but when. Anticipating the rigor of the standards today means avoiding the hassle of rebuilding processes tomorrow, ensuring that the organization is already operating under the new global standard even before it becomes mandatory.

Watch the full episode (Audio in Portuguese; turn on automatic captions).