Is your company ready to integrate sustainability into financial statements?
For years, sustainability reports (ESG) were corporate narrative exercises: flashy documents, full of infographics and long-term promises, often disconnected from the company's financial reality.
That officially ends in Mexico with the adoption of IFRS S1 and S2 (or their local equivalents, NIS). Starting from fiscal years beginning in 2025 (to report in 2026), sustainability ceases to be a "best practice" and becomes a financial disclosure obligation regulated by CNBV and supervised under international standards.
At ASG Risk, we have analyzed the impact of these standards and warn of a paradigm shift: if it's not auditable, it doesn't exist.
What really changes? The "Financial Materiality" approach
The big difference from previous reports (like GRI) is the audience. Before, it was written for "stakeholders" (community, employees, NGOs). IFRS S1 and S2 are written for investors and creditors.
It's no longer enough to say "we care for water." Now, the standard requires answering: How does water scarcity affect your projected cash flow for 2027?
The Impact on Risk Management and Internal Control
For audit and risk leaders, this opens three immediate battle fronts:
1. Data Convergence (The end of silos)
Historically, the Sustainability team and Finance team barely spoke to each other.
The Risk: Serious inconsistencies. The Sustainability Report promises "Net Zero 2030," but the Financial Statements have no provisions for the technology investment needed to achieve it.
The Consequence: This discrepancy will now be visible to regulators and investors, constituting a red flag for fraud or mismanagement.
2. Legal and Regulatory Liability
By being integrated into annual financial reports, ESG information is subject to the same legal scrutiny as a balance sheet.
Declaring false or inaccurate emissions data is no longer a "communication error," it could constitute a financial crime or securities fraud, exposing Directors and Officers to personal liabilities.
3. Supply Chain Under Scrutiny (Scope 3)
IFRS S2 requires reporting value chain emissions (Scope 3). This will force large companies to audit their suppliers. If you are a B2B supplier, prepare: your customers will require certified data to continue buying from you.
The Roadmap: How should organizations prepare?
At ASG Risk, we suggest abandoning the minimum compliance approach and adopting a risk assurance posture:
1. Establish Internal Controls over Non-Financial Information: Apply the same rigor of the COSO framework to your carbon and social data. Who validates the data? Is there segregation of duties in metrics collection? Is there traceability?
2. Standardize "Materiality": Finance and Risk must sit with Sustainability to define which risks are financially material. You can't report everything; you must report what impacts cash and value.
3. Pre-Assurance Audit: Don't wait for the deadline. Conduct a diagnostic audit (Gap Analysis) now to identify if your current data would withstand independent third-party scrutiny.
4. Board Training: The Audit Committee is now also the Financial Sustainability Committee. Directors must understand that approving the annual report implies certifying complex climate risks.
Conclusion
IFRS S1 and S2 are not just another bureaucratic procedure; they are the tool the market will use to differentiate resilient companies from those operating under "green illusions." The question for 2026 is simple: Are your internal controls ready to sustain the truth of your sustainability promises?