South Africa may be moving closer to mandatory corporate sustainability reporting, following a new partnership between the Financial Sector Conduct Authority and the International Finance Corporation (IFC), a member of the World Bank Group.
The FSCA and IFC have signed a co-operation agreement aimed at supporting the development of climate and sustainability disclosure regulations aligned with the International Sustainability Standards Board (ISSB). These global standards are designed to create a consistent, comparable, and reliable framework for sustainability disclosures that investors and other stakeholders can use for decision-making.
The ISSB was created by the International Financial Reporting Standards (IRFS) Foundation in 2021 to streamline multiple ESG (environmental, social and governance) reporting frameworks into a unified global standard. The first two ISSB standards – IFRS S1 and IFRS S2 – were published in June 2023. IFRS S1 outlines general sustainability disclosure requirements, while IFRS S2 focuses specifically on climate-related disclosures. Companies reporting under these standards must disclose how they govern and manage sustainability risks and opportunities, their strategic response, and the metrics and targets they use to monitor progress.
Although ISSB reporting is not yet mandatory in South Africa, a number of large, listed, and multinational companies are voluntarily adopting the framework – particularly those with international investors or operations in countries where such disclosures are required.
The Johannesburg Stock Exchange, for instance, has introduced Sustainability and Climate Disclosure Guidance aligned with the ISSB framework and the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Although the JSE guidance is not binding, it signals an expectation for listed companies to begin preparing for regulatory changes.
Market pressures are also mounting. Asset managers and institutional investors are increasingly demanding standardised, credible ESG data, prompting South African companies to align with global norms.
The FSCA and National Treasury have indicated that ISSB standards are being considered for incorporation into South Africa’s broader regulatory framework as part of the country’s sustainable finance roadmap. When implemented, ISSB-aligned reporting could become mandatory for:
- JSE-listed companies;
- public interest entities such as banks and insurers; and
- companies that exceed certain size or revenue thresholds.
Although no firm timeline has been announced, this new partnership suggests that mandatory requirements may not be far off.
“This partnership reflects our shared vision for a sustainable financial sector that supports inclusive economic development and long-term stability. We are proud to take this important step with IFC and the IFRS Foundation, bringing world-class sustainability reporting practices to South Africa,” said FSCA deputy commissioner Astrid Ludin.
The initiative forms part of the IFC’s Beyond the Balance Sheet programme, in collaboration with the United Nations Development Programme, the IFRS Foundation, and IFC’s Integrated ESG Programme. It seeks to tailor the global ISSB standards to South Africa’s regulatory environment and enhance the FSCA’s ability to oversee and implement them.
“This collaboration will help bring global consistency to climate-related financial disclosures while addressing local market priorities,” said Charles Canfield, IFC global manager for corporate governance. “South Africa is paving the way in the region by ensuring that companies, investors, and regulators are equipped to navigate the evolving sustainability landscape and respond to climate risks in a transparent and accountable way.”
The agreement includes several key deliverables:
- A jurisdictional roadmap for ISSB adoption.
- The development of ISSB-aligned regulatory frameworks.
- The creation of implementation tools, including guidance for boards.
- FSCA supervisory training.
- Engagement with industry stakeholders.
The FSCA states that this work builds on a broader strategic partnership between the IFC and the IFRS Foundation, announced during London Climate Action Week in 2023. That collaboration focuses on accelerating ISSB adoption in emerging markets and developing economies.
Through Beyond the Balance Sheet, the IFC is helping to promote transparent sustainability reporting and build investor confidence across such markets – with South Africa now poised to take a leading role on the continent.
