Necessary IFRS sustainability reporting in Kenya will start from 2027 to 2029.
For the SMEs which might be private curiosity entities, obligatory onboarding will start on January 1, 2029.
This unified framework goals to offer constant and comparable data, benefiting traders and fostering transparency throughout Kenyan markets.
Kenyan corporations will from 2027 be capable to immediately examine the efficiency of their Environmental, Social and Governance (ESG) initiatives with different firms globally because the nation strikes to undertake reporting beneath a standard normal worldwide.
The nation has initiated a plan to undertake the sustainability reporting beneath the Worldwide Monetary Reporting Requirements two (IFRS S2), designed to make public disclosures uniform, clear, and simple to check globally.
The Institute of Licensed Public Accountants of Kenya (ICPAK) has set January 1, 2027, because the graduation date for the obligatory adoption of the sustainability reporting beneath the IFRS.
Underneath the plan, in part one which started in January 2024, all organizations are required to undertake the sustainability reporting requirements voluntarily. Whereas in part two, which is the obligatory adoption is about to kick in from January 1, 2027 for public curiosity entities (PIEs), giant non-PIEs could have an additional one 12 months to be on boarded and can begin in 2028.
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Regulatory and transparency necessities
Public curiosity entities (PIEs) are organizations which have vital affect on the general public and economic system as a result of their dimension, complexity, or nature of operations and are subsequently topic to heightened regulatory and transparency necessities.
PIEs sometimes embody firms whose failure or misconduct might disrupt the monetary system or hurt giant teams of stakeholders, together with the general public.
ICPAK Chairman Philip Kakai mentioned that the adoption of the IFRS Sustainability Disclosure Requirements in a phased strategy will guarantee a clean transition for organisations of all sizes. For the SMEs which might be private curiosity entities, obligatory onboarding will start on January 1, 2029.
Nonetheless, part three, whicht will incorporate timelines for Public Sector Entities is but to be decided by ICPAK. “This strategy will enable organisations to construct capability, collect vital knowledge, and align their inside processes with the brand new requirements,” mentioned ICPAK Chairman Philip Kakai.
Earlier than the adoption all organisations will endure a readiness evaluation earlier than the preliminary sustainability disclosures are revealed.
IFRS sustainability reporting in Kenya
ICPAK Chief Government Grace Kamau mentioned these requirements will enable traders, regulators, and different stakeholders to make better-informed selections based mostly on dependable and clear sustainability data.
“As we undertake these requirements, we align ourselves with international greatest practices that may improve the credibility of Kenyan companies, improve investor confidence, and assist the expansion of a extra sustainable economic system,” mentioned Kamau.
This comes at a time when a report by the steering committee confirmed that 65 per cent of organisations polled don’t disclose environmentally associated data to their workers.
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Instruments to measure sustainability
ICEA LION chief finance officer Zipporah Chege, who steered the committee, famous that solely 14.7 per cent of organisations in Kenya have the instruments to measure sustainability.
“To the regulators, this is without doubt one of the areas the place we will really assist varied establishments on what instruments they’ll convey onboard to assist in the adoption and execution simpler,” mentioned Chege.
In accordance with ICPAK, as organizations worldwide grapple with fragmented sustainability reporting frameworks, Kenya’s sustainability reporting panorama can also be marked by various initiatives missing cohesion.
By adopting the IFRS Sustainability Disclosure Requirements, ICPAK goals to offer organisations with clear steering and frameworks to successfully monitor, handle, and disclose their sustainability impacts, together with local weather dangers and alternatives.
This strategy will improve comparability, remove fragmented reporting frameworks, and align Kenya’s reporting requirements with international greatest practices.
In Kenya, the accounting physique says there was the Nairobi Securities Trade’s Environmental, Social, and Governance (ESG) Disclosure Steerage, the Capital Markets Authority’s Code of Company Governance for public issuers, and the Central Financial institution of Kenya’s Local weather-Associated Danger Administration steering for the banking sector.
Moreover, the Sustainable Finance Initiative has launched business rules for sustainable banking, however all this lacks a coherent strategy.
Kakai famous that this patchwork of tips has offered a problem for firms and traders alike, making it troublesome to check knowledge throughout sectors.
“To deal with this, the Institute of Licensed Public Accountants of Kenya (ICPAK), in partnership with the Worldwide Sustainability Requirements Board (ISSB), is championing the adoption of a worldwide baseline for sustainability-related disclosures in Kenya,” mentioned the Chair.
This unified framework goals to offer constant and comparable data, benefiting traders and fostering transparency throughout Kenyan markets.
The ICPAK-ISSB initiative seeks to align Kenya’s reporting requirements with worldwide norms, selling sustainability practices that may improve the comparability and reliability of ESG knowledge, finally supporting extra knowledgeable funding selections.
