How to apply IFRS S1 and S2 standards in a Costa Rican hotel.

By Rebeca Sequeira.

The entry into force of the International Sustainability Standards IFRS S1 and IFRS S2—issued by the International Sustainability Standards Board (ISSB)—is radically transforming how tourism businesses in Costa Rica manage and report their climate and social risks. For a sector that contributes 8.2% of the national GDP (ICT 2024), these standards represent much more than an accounting requirement: they are a global necessity that requires a transformation in the management of waste, carbon footprint, and natural disasters and their impacts.

To understand a little more about what these rules are about, let's put their concept in the following matrix:

Aspect	IFRS S1 – General Requirements for Disclosure of Sustainability-Related Financial Information	IFRS S2 – Climate-Related Disclosures
Official title	IFRS S1 – General Requirements for Disclosure of Sustainability-Related Financial Information.	IFRS S2 – Climate-Related Disclosures.
Aim	Establish general principles for disclosing sustainability information that is useful for financial decision-making.	Require specific disclosures about risks and opportunities related to climate change.
Thematic coverage	All sustainability issues (environmental, social, governance) that have a financial impact on the company.	Only aspects related to climate change (physical and transition risks).
Report structure	Based on 4 pillars: Governance, Strategy, Risk Management, Metrics and Objectives.	It uses the same 4 pillars, but focuses exclusively on the climate.
Minimum content required	Governance and control processes - Risk assessment - Financial impact - Sustainability indicators and goals.	- GHG emissions (scopes 1, 2 and 3) - Climate scenarios - Decarbonization or mitigation plans.
Frame of reference	It can be complemented with frameworks such as SASB, GRI, and other internationally recognized standards.	It is based primarily on the recommendations of the TCFD (Task Force on Climate-related Financial Disclosures).
Materiality	Focus on financial materiality: Only what could affect investor decisions is reported.	Same as IFRS S1: Financial relevance of climate change.
Temporality of content	Historical, current and prospective information.	Strong emphasis on future impacts.
Reporting frequency	It must be submitted together with the annual financial statements.	Same as IFRS S1.
Application in Costa Rica	Approved by the College of Public Accountants of Costa Rica through Circular 33-2023.	Also approved by the same circular. Voluntary adoption from 2024.
Suggested effective date	Starting January 1, 2024, with early adoption possible.	Same suggested start as IFRS S1.

Physical and transition risks: the double climate front

A hotel has identified an increase in the frequency of high tides and torrential rains over the past five years, causing partial flooding in its common areas. Added to this is a recent study by the National Meteorological Institute (IMN), which projects an intensification of phenomena such as El Niño and La Niña, increasing the risk of droughts and more intense storms. These elements constitute the so-called physical risks, which must be described in the notes to the financial statements: their nature, scope, probability, and potential impact on cash flow.

On the other hand, hotels must also analyze their transition risks, i.e., those arising from new public policies, technological changes, or market preferences. For example, the Ministry of the Environment has proposed a future environmental labeling standard for accommodations, which will require hotels to invest in systems to measure and reduce their carbon footprint if they wish to remain competitive against international chains certified as carbon neutral. Furthermore, platforms such as Booking.com and Expedia have already incorporated filters for sustainable accommodations, putting additional pressure on the business strategy.

How these aspects are reflected in accounting

Under IFRS S2, climate information is not limited to an external sustainability report: it must be integrated directly into the financial statements. For example, in the income statement, the hotel could record an increase in its insurance premiums due to its high-risk coastal location. This could also reflect a decrease in electricity costs following the installation of a solar panel system on the restaurant's roof.

In the notes to the financial statements, disclosures such as:

The existence of an environmental committee led by general management and advised by an external consulting firm that conducts semiannual audits on energy consumption and waste management.

A five-year strategy that includes the relocation of some housing units and the adoption of internal electric mobility (carts and luggage transport).

A scenario analysis that projects the financial impact of a 10% reduction in occupancy during extreme weather events, and how this would affect cash flow.

A table with metrics could be:

1. Annual energy consumption

2. Percentage of water reused

3. Tons of CO₂ emitted (Scope 1 and 2) and

4. Reduction targets by 2030.

Real example: A hotel in Monteverde

A case that illustrates the applicability of these concepts is a hotel located in Monteverde, one of the pioneers in sustainability in the country. This company measures and reports its carbon emissions annually, which it offsets through its own reforestation program. It has published its climate strategy online, setting concrete goals such as reducing plastic use by 90% and achieving carbon neutrality by 2026. Although it does not yet report under IFRS S2, its experience can serve as a guide for other hotels that need to adapt their financial statements to these requirements.

Adopting IFRS S2 not only avoids sanctions or criticism from regulators or investors. In sectors such as tourism, it can translate into concrete benefits: access to green credit lines, attracting environmentally conscious international tourists, inclusion in sustainable agency listings, and improved corporate reputation. It also allows companies to anticipate adverse scenarios and make decisions based on data, not intuition.

Conclusion

For hotels, this demonstrates that implementing IFRS 2 is not a technical abstraction, but a concrete tool for connecting sustainability, risk management, and accounting. The key is not to wait for the regulations to become mandatory: acting now will allow companies to adapt quickly, build internal capabilities, and, above all, turn climate risks into real business opportunities.