Costa Rica's Climate Disclosures: Building Capabilities Ahead of the 2028 IFRS Mandate

Costa Rica is positioning itself at the forefront of Latin America's sustainability transition. With IFRS S1 and S2 (NIIF S1 and S2 locally) becoming mandatory in 2028, Costa Rican companies face both a deadline and an opportunity to fundamentally reshape how they measure, manage, and communicate climate-related financial risks.

Our team recently met with Costa Rican companies and universities at the ESG 2025 Forum in San José to discuss how companies can create tactical plans to make this shift towards NIIF reporting. We’ve compiled our insights on corporate planning below.

2025-2027: A Capability-Building Runway

2028 may feel distant for Costa Rican companies. But between 2025-2027, this window offers a unique opportunity to create capabilities and prepare for formal disclosures. Companies must use this time to establish robust governance structures, develop reliable data collection systems, and implement internal controls that can withstand future assurance requirements.

This means appointing board oversight for climate risks, mapping emissions sources across value chains, and creating cross-functional teams that bridge finance, operations, and sustainability.

One of NIIF S1 and S2's most compelling advantages is the "report once, comply globally" principle; Costa Rican companies can satisfy multiple stakeholder expectations—from local supervisors to global investors—through a single, harmonized reporting framework.

Industry Materiality over a Generic Sustainability Focus

Rather than reporting on dozens of generic sustainability metrics, NIIF S2's integration with SASB standards allows Costa Rican companies to focus on the topics most financially material to their industry.

For the Costa Rican tourism sector, this might mean water stress and extreme weather impacts. For agricultural exporters, it could be climate-related crop yield volatility and changing precipitation patterns. For manufacturers, it might be supply chain disruption, process emissions, and carbon pricing exposure. This sector-specific approach ensures comparable data that is aligned with global peers while keeping reporting manageable and relevant.

Physical and Transition Risks: Costa Rica's Climate Reality

Already a global renewables leader, Costa Rica faces unique transition opportunities. Companies can leverage this advantage while assessing exposure to evolving carbon pricing mechanisms, changing customer preferences for low-carbon products, and competitive positioning as early climate actors. At the same time, they should quantify location-specific physical risks such as flooding, heat stress, landslides, and storm intensity along critical assets and supply routes.

From "Optimal" to "New Optimal": Building Future Resilience

The most sophisticated aspect of NIIF S2 isn't backward-looking emissions accounting—it's forward-looking scenario analysis and risk assessments that reimagine operations for climate resilience.

Costa Rica's geographic position makes NIIF S2's risk assessment and scenario analysis requirements particularly urgent. Companies must quantify both physical and transition risks across multiple time horizons and complete a scenario analysis to adjust operations towards a "new optimal" rather than returning to historical norms.

Companies that approach NIIF S2 strategically will gain competitive advantages through resource efficiency, supply chain reliability, brand differentiation, and access to more financing.

In Summary: The Path Forward

Costa Rica's 2028 IFRS mandate represents more than a regulatory milestone—it's an inflection point for how companies understand, manage and communicate value creation in today’s climate-impacted world. The companies that use this time wisely will discover that climate disclosure isn't just about compliance—it's about building the adaptive capacity that creates competitive advantage in today’s global economy.

Thank you to our partners at Mercado de Valores Grupo Financiero, Universidad Nacional Costa Rica, and Grupo INS for a great discussion.