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ESG reporting: SA takes a step forward in aligning with ISSB 

South Africa’s Financial Sector Conduct Authority (FSCA) has signed a landmark cooperation agreement with the International Finance Corporation (IFC), marking a step toward strengthening the country’s sustainability reporting framework.

According to a joint statement released earlier this month, the agreement aims to align South Africa’s regulations with the International Sustainability Standards Board (ISSB) disclosure framework to position “South Africa as a continental leader in sustainability disclosure reform, unlocking more consistent, comparable, and transparent ESG reporting across the financial sector”.

Also, as per the release, the initiative “includes the development of a jurisdictional roadmap for ISSB adoption, the design of ISSB-aligned regulatory frameworks, creation of implementation tools such as Board of Directors guidance, supervisory training for FSCA staff, and engagements with the financial and corporate sectors”.

No date was set for the rollout of the above, nor did the statement say whether adoption will be mandated in South Africa.

KRIS’ opinion:

The adoption of the IFRS disclosure standards by listed companies in South Africa is still in progress, with some in the early stages of implementation, most typically those at the top end of the JSE. An informal study in 2024 analysing the sustainability reports of the Top 40 JSE-listed companies found the following:

  • 67% overall alignment with ISSB (IFRS S1/S2) disclosure themes.
  • 81% disclosed governance-related sustainability information.
  • 43% disclosed strategy-related information.
  • 100% disclosed risk management practices.
  • 93% disclosed metrics and targets.

Even if mandated here, it will take some time for mid-to-small caps to adopt the IFRS standards. Many of these companies are battling to understand how to apply the standards, with some finding them onerous to implement. One could also question the adoption for companies that are low-to-no emitters of Scope 1 and 2 greenhouse gases (GHG) and those that don’t emit any Scope 3 GHGs at all.

What’s clear, however, is that institutional investors still expect listed companies to disclose ESG comprehensively, and as this recent article from Citywire South Africa neatly says: “Staying the course … Despite political headwinds, none of the panellists expressed any intention to retreat from ESG. On the contrary, they argued for deeper, more credible integration, one that links business resilience with social legitimacy and long-term performance.”