This development represents a significant shift in how organizations identify, measure, and disclose non-financial factors that are increasingly relevant to investors, lenders, regulators, and other stakeholders.
IFRS S1 sets out the general requirements for sustainability-related financial disclosures, requiring companies to explain how ESG-related risks and opportunities may affect their financial position, performance, and cash flows. IFRS S2, in turn, focuses specifically on climate-related risks and opportunities, including greenhouse gas emissions, climate resilience, transition plans, and exposure to environmental regulation.
Unlike traditional sustainability reports—which were often voluntary, narrative in nature, and disconnected from financial reporting—these standards aim to integrate sustainability into financial analysis, explicitly linking ESG metrics with corporate strategy, capital allocation, and decision-making processes.
In Costa Rica, the College of Public Accountants formally approved the adoption of these standards through an agreement published in Official Gazette No. 3-2024, establishing a phased implementation process. While application was voluntary during 2024, it becomes mandatory as of January 1, 2026 for companies classified as Large Taxpayers (Grandes Contribuyentes) by the Tax Administration. As a result, affected companies must begin collecting ESG-related information throughout 2026 in order to issue their first mandatory sustainability report as of December 31, 2026, to be published in 2027.
From a business perspective, this change means that sustainability shifts from being primarily a reputational or marketing topic to becoming a formal component of the corporate information system. Companies subject to the standards will be required to disclose, among other matters, how senior management oversees ESG issues, which environmental and social risks are most relevant to the business, how these risks are incorporated into strategic planning, and how they may affect future financial results.
One of the main challenges lies in the fact that IFRS S1 and S2 require quantifiable, verifiable, and consistent metrics. These include indicators such as carbon emissions (Scope 1, Scope 2, and in some cases Scope 3), energy consumption, exposure to climate-related risks, supply chain impacts, governance policies, and internal control mechanisms over non-financial information. For many companies, compliance will require developing new measurement systems, strengthening internal controls, and coordinating finance, operations, legal, and sustainability functions.
From a financial standpoint, the adoption of these standards may also influence access to financing, investor risk perception, credit conditions, and business valuation. Financial institutions and investment funds are increasingly incorporating ESG criteria into their decision-making processes. As a result, robust and reliable sustainability disclosures may become a competitive advantage, while weak or inconsistent implementation could expose companies to regulatory scrutiny or reputational risk.
For Costa Rican companies—particularly those operating in sectors such as tourism, energy, agribusiness, manufacturing, and services—the IFRS Sustainability Standards also represent an opportunity to align corporate strategy with global trends, improve environmental and social risk management, and strengthen positioning with international clients, business partners, and financial institutions.
That said, the adoption process is not without challenges. It requires investment in training, technology, specialized advisory services, and management time, as well as a cultural shift toward a more integrated view of financial and non-financial performance. Organizations that delay preparation may face higher implementation costs, compliance risks, and a loss of credibility with investors and other stakeholders.
The adoption of the IFRS Sustainability Standards (IFRS S1 and S2) in Costa Rica marks a profound change in how companies report performance and manage strategic risks. As of 2026, for Large Taxpayers, sustainability reporting moves from a voluntary exercise to a formal requirement directly linked to financial reporting.
Companies that approach this transition in an early, structured, and strategic manner will be better positioned to comply with regulatory requirements, strengthen governance, improve access to financing, and differentiate themselves in increasingly demanding markets. Conversely, those that react too late may face higher costs, regulatory exposure, and reduced confidence from investors and stakeholders.
Official references
International Sustainability Standards Board (ISSB) — IFRS S1 and IFRS S2
https://www.ifrs.org/issued-standards/ifrs-sustainability-standards/
College of Public Accountants of Costa Rica — Adoption of IFRS S1 and S2 (Official Gazette No. 3-2024)
Ministry of Finance — Tax Administration (Large Taxpayers)
CONASSIF — Prudential guidelines on ESG information
IFRS Foundation — Sustainability Disclosure Standards