Sustainability reporting is a key component of corporate governance and has an important role in financial disclosure across various organisations.
As regulators globally integrate the International Sustainability Standards Board’s (ISSB) IFRS S1 and IFRS S2 into their legal frameworks, South Africa is proactively aligning with these developments.
The pressing question for South African companies, whether publicly listed, state-owned, or privately held, is not if ISSB-aligned reporting is coming, but how ready they are. Below, Leonie du Raan unpacks the implications for South African organisations and outlines the practical steps to get ahead of the change.
1. The ISSB Framework: Global Status
The ISSB introduced its first two standards in June 2023:
- IFRS S1: Outlines general requirements for sustainability-related financial information, focusing on governance, strategy, risk management, as well as metrics and targets.
- IFRS S2: Addresses climate-related disclosures and extends the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), requiring the reporting of Scope 1, 2, and 3 greenhouse gas (GHG) emissions.
Both standards are effective for reporting periods starting on or after 1 January 2024.
As of September 2025, the IFRS Foundation has confirmed that 37 jurisdictions — representing approximately 60% of global GDP and 60% of global greenhouse gas emissions — have adopted or are actively introducing the ISSB standards into their legal or regulatory frameworks. This includes major markets like Brazil, Australia, and several African nations (Nigeria, Kenya and Ghana).
Amendments to IFRS S2 (December 2025)
On 11 December 2025, the ISSB released targeted amendments to IFRS S2 to address challenges in GHG emissions disclosures. This is effective for reporting periods commencing on or after 1 January 2027 (with early application allowed) Key amendments include:
- Limiting Scope 3 Category 15 emissions disclosures to financed emissions for entities, which include loans and investments, while excluding emissions from investment banking and underwriting.
- Allowing the use of alternative GHG measurement methods as required by jurisdictional authorities.
- Providing flexibility in selecting industry-classification systems for disaggregating financed emissions.
- Permitting the use of alternative global warming potential (GWP) values specified by jurisdictional authorities.
These amendments are particularly relevant for South African banks, insurers and asset managers that faced difficulties with the initial Scope 3 emissions requirements.
Global Interoperability: ISSB and the EU’s CSRD
For South African companies dealing with European clients or parent companies, understanding the intersection of ISSB standards and the EU’s Corporate Sustainability Reporting Directive (CSRD) is crucial.
In May 2024, the ISSB and the European Financial Reporting Advisory Group (EFRAG) published interoperability guidance confirming strong alignment between IFRS S2 and the EU’s climate-related disclosures, while also detailing differences. This guidance helps companies streamline data collection without redundancy.
In February 2025, the EU’s Omnibus legislative package proposed narrowing the scope of the CSRD and extending implementation timelines for some reporting categories by 2 years. The EU has enacted a ‘Stop-the-Clock’ directive, putting parts of this delay into effect as negotiations continue. An outcome from the Omnibus discussions is anticipated in 2026.
South African Readiness
South Africa does not yet have mandatory ISSB-aligned sustainability reporting requirements for the private sector. However, the regulatory groundwork being laid is substantial, and the trajectory is clearly toward mandatory disclosure. Companies that treat this as a distant concern risk being caught under-prepared.
The Johannesburg Stock Exchange (JSE) updated its voluntary Sustainability Disclosure Guidance to align with ISSB.
The Financial Sector Conduct Authority (FSCA) is the most active regulatory body in driving alignment with the ISSB in South Africa. In its March 2025 Sustainable Finance Update Report, the FSCA confirmed a climate-first approach to disclosure.
Prudential Authority (PA): In 2024/2025, the PA issued guidance for banks and insurers that is explicitly aligned with IFRS S2, which explains why the amendments regarding “financed emissions” are so critical for the local financial sector.
In October 2024, the Companies and Intellectual Property Commission (CIPC) updated its XBRL taxonomy to include a sustainability disclosures module aligned with IFRS S1 and S2. The Department of Trade, Industry and Competition (DTIC) and the CIPC have established a steering committee to oversee a regulatory impact assessment on adopting the ISSB standards.
Conclusion
As South African companies prepare for ISSB-aligned reporting, understanding these developments, both globally and locally, is essential for effective compliance and competitive positioning in sustainability reporting. With the increasing regulatory focus on sustainability, companies must assess their readiness and adapt to the evolving landscape.
Note: This article is prepared for general informational purposes. Regulatory positions and legislative proposals referenced are as of February 2026 and are subject to change. Companies should seek Moore specific professional advice in relation to their own circumstances.
