Author Leonie du Raan: The Sherlock Lens

What Changed This Year

  • The Companies and Intellectual Property Commission (CIPC) added a sustainability module to its XBRL taxonomy early in 2025, which makes structured disclosure more machine-readable.
  • The Financial Sector Conduct Authority (FSCA) and the International Finance Corporation (IFC) signed an agreement in July 2025 to support rules and guidance aligned with the ISSB (IFRS S1/S2). This agreement is a significant driver of the financial sector’s move toward more formal and standardised climate and sustainability disclosure.
  • The Johannesburg Stock Exchange (JSE) updated its guidance and published a sustainability policy for 2025, encouraging listed issuers to follow international standards and prepare for climate disclosures. This pressured listed companies to shift from voluntary, narrative reporting to structured, comparable metrics.
  • Mid-2025 industry studies show rising awareness and intention to adopt ISSB-aligned disclosures. However, readiness remains varied — many firms are reporting in part, not yet end-to-end.

 
Current Challenges in Practice

  • Data and Systems: Many companies still pull sustainability numbers from disparate sources like spreadsheets, emails, and siloed teams. This approach is adequate for a one-off narrative report but insufficient for standardised disclosures.
  • XBRL tagging, or assurance. Building a single, reliable source of truth requires significant time and budget.
  • Controls and Assurance Readiness: Assurance providers with ISSB and climate experience are scarce. Pre-assurance, where a firm’s data and controls are checked before a formal audit, is becoming a highly recommended practice to ensure data integrity and control readiness. However, firms often struggle with where to begin or how to bridge the gap between internal reviews and external assurance.
  • Skills and Governance: Boards and audit committees are briefed on climate risk and sustainability. Nevertheless, many still lack the deep technical expertise required for effective oversight.. This can lead to weak oversight, slow decisions on capital allocation, and inconsistent targets. Training and more straightforward board-level assignment of responsibility can help.
  • Framework Alignment and Scope: Companies face a multitude of frameworks, including King IV, JSE guidance, ISSB (IFRS S1/S2), local laws, and investor requests. This can create confusion, causing some organisations to delay action while they try to pick a single approach that satisfies all stakeholders. Often, the result is delays and partial disclosures.
  • Sector-Specific Burdens: South Africa’s economy is significantly reliant on coal and energy-intensive industries, which present complex disclosure challenges, such as measuring Scope 1-3 emissions, modelling transition scenarios, and quantifying adaptation needs. These technical tasks often require external data, modelling tools and specialist advice.
  • Cost and Timing: Upgrading IT systems, hiring specialists, and securing assurance services require a financial investment. Boards often weigh these compliance costs against immediate business needs, which slows progress, particularly in smaller firms and state-owned enterprises.

 
What to Focus on Next: Practical Steps

  • Start with Controls: Focus on mapping data sources, documenting processes, and closing fundamental gaps rather than creating a glossy report.
  • Do Pre-assurance: Getting your data and processes checked by a specialist exposes weak controls early and reduces the risk of a qualified opinion later. This is often a more cost-effective approach than correcting a failed audit later.
  • Choose Standards Pragmatically: Use ISSB (IFRS S1/S2) as the backbone and map King IV and JSE requirements where possible. This approach reduces duplication.
  • Build a Central Team: Assemble a small team that combines finance, risk, sustainability, and IT expertise. Give this team a clear mandate and realistic timelines.
  • Invest in Training: Ensure the board and audit committee receive training to ask the right questions about data quality and assurance.

 
Conclusion
 
South Africa’s move toward structured sustainability reporting in 2025 demonstrates that voluntary, narrative-style reports will not be sufficient for much longer. Investors and regulators now demand verifiable, comparable data they can trust. For many companies, the primary challenge is not a lack of strategy but a gap in systems, controls and assurance readiness.
 
Pre-assurance provides a solution by allowing companies to test their data and processes before external assurance begins. This helps them spot problems early, avoid last-minute surprises, and build stakeholder confidence.