Islamabad, Jan 1: The Securities and Exchange Commission of Pakistan (SECP) has announced the phased adoption of the IFRS Sustainability Disclosure Standards in the country, marking a significant step in enhancing corporate transparency and sustainability reporting.
The standards, IFRS-S1 and IFRS-S2, issued by the International Sustainability Standards Board (ISSB), are aimed at promoting consistent and complete disclosures on sustainability-related financial information and climate-related risks. IFRS-S1 mandates companies to disclose information about sustainability-related risks and opportunities that could impact their cash flows, access to finance, or cost of capital.
IFRS-S2 focuses on identifying, measuring, and disclosing climate-related risks and opportunities. These standards are intended to meet the needs of investors, lenders, and creditors, helping them assess a company’s management of sustainability risks and opportunities.
The SECP’s decision follows an extensive consultation process, involving market readiness analysis, awareness sessions with the Institute of Chartered Accountants of Pakistan (ICAP), and feedback from various stakeholders. The phased implementation will begin in July 2025 for listed companies, with subsequent phases starting in 2026 and 2027, based on criteria such as total assets, turnover, and number of employees. Unlisted public interest companies will be required to comply starting in 2027.
A key feature of the new standards is that companies will be required to obtain assurance on their sustainability reporting from their auditors starting in the second year of reporting. This adoption is part of the SECP’s broader effort to align Pakistan’s capital markets with global best practices in environmental, social, and governance (ESG) reporting. The move aims to enhance transparency, improve risk management, and foster a culture of sustainable business practices across corporate sectors.
