International Sustainability and Climate Standards (IFRS S1 and IFRS S2)

According to the ISSB, they agreed to take effect as of January 2024. This is because investors demanded disclosure of large companies' information related to comprehensive, consistent and comparable sustainability.

It is worth mentioning that the early implementation of IFRS S1 is allowed as long as it is applied together with IFRS S2. Under the same conditions, the application of IFRS S2 would begin, its early application is permitted as long as it is applied in conjunction with IFRS S1.

IFRS S1: General requirements for the disclosure of financial information related to sustainability

The objective of IFRS S1 is to provide a framework for the disclosure of sustainability-related financial information that is consistent, comparable, reliable and relevant. This is achieved by establishing clear and specific requirements on what information should be disclosed and how it should be presented.

The standard seeks to promote transparency and accountability in relation to the sustainability aspects of an entity, implying that entities must clearly and fully disclose information on their performance in terms of environmental, social and governance impacts, as well as the policies and practices they have in place to address these aspects.

IFRS S2: Disclosures related to climate change

This standard seeks to address the need to provide more detailed and relevant financial information on the financial and non-financial impacts of climate change on entities, and thus provide investors, lenders and other users of financial reports with a better understanding of the risks and opportunities associated with climate change and how these may affect an entity's financial performance, including disclosures on climate risk management, carbon footprint, analysis of the expected impacts of climate change on the entity and assessing long-term sustainability and resilience.

Some key pillars of this IFRS S2 standard are as follows:

• Identification and assessment of climate-related risks and opportunities.
• Measuring and quantifying greenhouse gas (GHG) emissions.
• Climate change resilience and adaptability assessment.

It is important to mention that, to date, Colombia has not issued a decree, regulation or law indicating that these standards (IFRS S1 and S2) must be implemented at a certain date or at a certain cut-off point. The application of these standards to date is at the discretion of each company.