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Determining the location of your organisation’s IFRS sustainability disclosures
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As the date for the mandatory adoption of IFRS sustainability disclosure standards, IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures) draws closer, organisations have to decide on where to locate these disclosures.
For example, in Kenya, the adoption roadmap for the IFRS sustainability disclosure standards mandates public interest entities to comply with the standards for annual periods beginning on or after 1 January 2027, and these entities must determine the location of these disclosures.
The standard provides organisations with flexibility on where to locate their disclosures and offers guidance on making this determination.
The guidance allows sustainability-related financial information to be disclosed in various locations, subject to applicable local regulations or laws.
Therefore, organisations can include the disclosures within the same document as the general purpose financial statements, or in a separate sustainability report cross-referenced from the general purpose financial statements, if certain conditions are met. In addition to these conditions, organisations should consider the following.
An assessment of an organisation’s additional reporting obligations or frameworks on sustainability information beyond the IFRS sustainability disclosures is an important consideration when determining where to locate these disclosures.
For example, some organisations in Kenya apply multiple sustainability frameworks, such as the GRI (Global Reporting Initiative) framework, which applies to listed organisations.
These organisations need to consider additional requirements, including local laws and regulations, to determine where to place their IFRS sustainability disclosures.
For instance, some organisations might choose to locate the relatively shorter (investor-focused) IFRS sustainability-related financial information within their integrated report that is published together with their financial statements, rather than locating the information in a separate sustainability report that is prepared at a different time and speaks to a broader set of stakeholders compared to the investor-focused IFRS sustainability disclosures.
Another consideration for organisations is the level of resources and capacity available to prepare a separate sustainability report and to provide cross-references from the separate general purpose financial report. Another consideration for organisations is branding preferences, which influence the location of these disclosures and whether to prepare a separate sustainability report.
By considering these aspects, organisations should ensure that preparing their IFRS sustainability disclosures does not become onerous, inefficient, or wasteful.
Akinyemi Awodumila is a Partner at PwC Kenya. He is an author who writes and speaks widely on corporate reporting topics.
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