Costa Rica: International Sustainable Financial Reporting Standards S1 and S2

Published on Feb 20, 2024

The Association of Public Accountants of Costa Rica established, through Circular No. 33-2023, the adoption of International Financial Reporting Standards (IFRS) S1 and S2 related for sustainability, and it was ratified through its publication in the Official Gazette “La Gaceta” No. 3 on Wednesday, January 10, 2024.

Sustainability IFRS is issued by the International Sustainability Standards Board (ISSB) which issues standards on companies' sustainability and climate risks, impacts and opportunities. The objective is to disclose sustainability-related financial information in a more uniform, complete, comparable, and verifiable manner, which in turn allows for the assessment of an entity's exposure and management of risks and opportunities related to environmental and climate issues in the short, medium and long term. This information complements the information in the financial statements issued by an organization, generating an integrated report.

The scope and objectives of both standards are:

  • IFRS S1: "General Requirements for Disclosure of Sustainability-Related Financial Information", which aims to enable companies to communicate the sustainability risks and opportunities they face in the short, medium and long term, and seeks to ensure that relevant information is provided for decision-making.
  • IFRS S2: "Climate-Related Disclosures", sets out climate-specific reporting requirements; disclosing information that allows an investor to adequately assess and understand the effect of risks and opportunities and transition to decision-making on the provision of resources. As well as the method for measuring greenhouse gases.

The adoption of both standards in Costa Rica is established as of January 1, 2024, considering a transitional period for gradual implementation, as follows:

  1. Voluntary application from January 1st, 2024.
  2. Companies with a public obligation to render accounts, supervised and regulated by CONASSIF, will report in 2026 the information of the fiscal close as of December 31, 2025.
  3. Companies classified as large taxpayers before the Tax Administration and outside subsection b), will report in 2027 the information of the fiscal closure as of December 31, 2026.
  4. Other entities outside the categories referred to in subparagraphs (b) and (c) that apply the International Financial Reporting Standards (IFRS) may adopt IFRS S1 and IFRS S2 in such period as the entity's management deems appropriate.
  5. For entities that apply the International Financial Reporting Standards for Small and Medium Enterprises, it will not be mandatory until the standard determines it in a mandatory manner.

This is an important milestone for Costa Rica in terms of transparency and accountability through the sustainability and financial information disclosure, motivated by international trends in this area, as well as commitments associated with Costa Rica's accession as a member of the Organization for Economic Cooperation and Development (OECD); This is how organizations have the opportunity to strengthen their management by taking advantage of the relevant information that will be generated through the adoption of IFRS sustainability-related standards.

Our team specialized in sustainability issues advises our clients on the implementation of sustainable financial standards in case the organizations want to report voluntary in the short term and/or once the reporting standards will be mandatory.

Contact us to get more information.
Dixania Azofeifa. Environmental Specialist at Arias, Costa Rica. -
Roberto Cordero. Partner at Arias, Costa Rica. -

The information provided by ARIAS® is presented for informational purposes only. This information is not legal advice and is not intended to create, and does not constitute, an attorney-client relationship. Readers should not act upon this information without seeking advice from professional advisers.