As businesses worldwide move towards greater transparency in sustainability reporting, Sri Lanka has introduced its own set of sustainability disclosure standards—Sri Lanka Financial Reporting Standards (SLFRS) S2. This standard specifically focuses on climate-related disclosures, helping businesses align with global sustainability practices while ensuring accountability for their environmental impact. One of the key aspects of SLFRS S2 is the reporting of greenhouse gas (GHG) emissions, which will soon become a mandatory requirement.
SLFRS S2 aims to provide a standardized framework for businesses to report climate-related risks, opportunities, and financial impacts. It requires organizations to disclose information on:
Among these, GHG emissions reporting plays a critical role, as it directly impacts a company’s sustainability profile, regulatory compliance, and investor confidence.
The standard requires companies to measure and disclose their GHG emissions across three categories:
Initially, businesses are required to report only Scope 1 and Scope 2 emissions, with Scope 3 becoming mandatory two years after the standard’s initial application. This phased approach allows companies to gradually enhance their reporting mechanisms and data collection processes.
SLFRS S2 is currently being introduced with a transition period, but businesses must prepare for mandatory compliance soon. The standard follows global best practices, such as the Greenhouse Gas Protocol, ensuring consistency with international frameworks. Organizations that do not align with these reporting requirements risk losing credibility with investors, financial institutions, and regulatory bodies.
To comply with SLFRS S2, businesses should:
SLFRS S2 marks a significant shift towards corporate sustainability accountability in Sri Lanka. With GHG emissions reporting becoming mandatory in phases, businesses must act now to establish proper reporting frameworks. Early adoption will not only ensure compliance but also position companies as leaders in sustainable business practices, attracting environmentally-conscious investors and customers. By proactively integrating SLFRS S2 into their reporting strategies, Sri Lankan businesses can drive meaningful climate action while staying ahead in an increasingly regulated corporate landscape.