- Necessary IFRS sustainability reporting in Kenya will start from 2027 to 2029.
- For the SMEs which are private curiosity entities, obligatory onboarding will start on January 1, 2029.
- This unified framework goals to supply constant and comparable info, benefiting traders and fostering transparency throughout Kenyan markets.
Kenyans corporations will from 2027 have the ability to straight examine the efficiency of their Environmental, Social and Governance (ESG) initiatives with different corporations globally because the nation strikes to undertake reporting underneath a standard commonplace globally.
The nation has initiated a plan to undertake the sustainability reporting underneath the Worldwide Monetary Reporting Requirements two (IFRS S2), designed to make public disclosures uniform, clear, and straightforward 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 underneath the IFRS.
Beneath the plan, in section one which begins in January 2024, all organizations can be required to undertake the sustainability reporting requirements voluntarily. Whereas in section two, which is the obligatory adoption is about to kick in from January 1, 2027 for public curiosity entities (PIEs), massive non-PIEs could have an additional one yr to be on boarded and can start 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 financial system because of their dimension, complexity, or nature of operations and are due to this fact topic to heightened regulatory and transparency necessities.
PIEs sometimes embrace corporations whose failure or misconduct may disrupt the monetary system or hurt massive 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 method will guarantee a easy transition for organisations of all sizes. For the SMEs which are private curiosity entities, obligatory onboarding will start on January 1, 2029.
Nevertheless, section three, whicht will incorporate timelines for Public Sector Entities is but to be decided by ICPAK. “This method will permit organisations to construct capability, collect essential knowledge, and align their inner processes with the brand new requirements,” mentioned ICPAK Chairman Philip Kakai.
Earlier than the adoption all organisations will bear 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 permit traders, regulators, and different stakeholders to make better-informed choices based mostly on dependable and clear sustainability info.
“As we undertake these requirements, we align ourselves with international greatest practices that may improve the credibility of Kenyan companies, enhance investor confidence, and help the expansion of a extra sustainable financial 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 info 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 help varied establishments on what instruments they’ll deliver 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 be marked by numerous initiatives missing cohesion.
By adopting the IFRS Sustainability Disclosure Requirements, ICPAK goals to supply organisations with clear steerage and frameworks to successfully monitor, handle, and disclose their sustainability impacts, together with local weather dangers and alternatives.
This method 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 Alternate’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 steerage for the banking sector.
Moreover, the Sustainable Finance Initiative has launched trade ideas for sustainable banking, however all this lacks a coherent method.
Kakai famous that this patchwork of pointers has offered a problem for corporations and traders alike, making it troublesome to check knowledge throughout sectors.
“To handle 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 world baseline for sustainability-related disclosures in Kenya,” mentioned the Chair.
This unified framework goals to supply constant and comparable info, 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 choices.
