From document-based compliance to geospatial reality: verifying IFRS S2 physical climate risks under ISSA 5000

Purpose This study aims to apply legitimacy theory, integrated with institutional theory, to the problem of physical climate risk verification. This study examines why the sufficient and appropriate evidence standard established by ISSA 5000 may not always be satisfied through conventional document-based verification when assessing physical climate-related risks disclosed under IFRS S2 and how the resulting gap extends into financial reporting through measurement judgments under IAS 36, IAS 2 and IAS 37. This study further considers whether such risks may be appropriately identified as material misstatements and proposes a simulation framework integrating advanced geospatial audit technologies. Design/methodology/approach This research follows a constructive, illustrative single-case design based on a simulated yet empirically grounded representative archetype of a water-intensive manufacturing facility located within the Konya Closed Basin, a hydrologically vulnerable region of Turkey. A five-stage analytical procedure is used, using a calibrated groundwater depletion trajectory and TerraClimate Vapor Pressure Deficit data for atmospheric water demand assessment, to evaluate the assurance gap between the forward-looking continuity assumptions disclosed and independently observable physical conditions. Findings The findings of this study suggest that material physical risks, including structural groundwater depletion and a potential water supply tipping point around 2032, may not be sufficiently verifiable through conventional document-based audit procedures, yet may become more visible through remote sensing and geospatial analysis. This study further suggests that the reasonable assurance framework under ISSA 5000 faces methodological challenges when applied to spatially dependent and forward-looking climate risks, as documentary evidence alone may be insufficient to substantiate the resilience assumptions disclosed. Originality/value This study contributes to the sustainability assurance literature by proposing the Geographic Data-Based Substantive Verification (GDB-SV) framework, which integrates externally generated spatial and atmospheric data into the assurance evidence hierarchy. By grounding the framework in legitimacy theory and institutional theory, this study suggests that geospatial evidence may contribute to strengthening the procedural basis on which assurance conclusions concerning forward-looking climate disclosures are formed. This, in turn, may support a methodological reconfiguration of audit evidence in sustainability assurance, where the auditor’s role extends beyond document verification toward professionally judged, scientifically informed and technology-enabled evidence evaluation.