Page 36 - CMA Journal (Nov-Dec 2025)

)RFXV 6HFWLRQ
Sustainability Reporting and Disclosures

Under IFRS S1 & S2

Sustainability, commonly used as a synonym for ESG, are influenced by Task
has become a buzzword across the corporate scene Force on Climate-
since the issuance of “ESG Disclosure Guidelines for Related Disclosures
Listed Companies” by SECP in June 2024. However, most (TCFD)5 and Global
of the speculations ended when SECP issued an Order¹ Reporting Initiative
on 31 December 2024 for adoption and implementation (GRI)6.
of IFRS S1 & S2 issued by the International Sustainability
Standards Board (ISSB)². This order established a pathway Structure of IFRS
for the piecemeal adoption of these standards, starting S1 & IFRS S2
from listed companies to non-listed public companies,
whether licensed or registered with the commission. It IFRS S18 & IFRS S29 are
also provided guidelines on reporting and approval structured on the
mechanisms as well as assurance of financial information TCFD’s approach of
for sustainability. “Four Pillars,” namely 1)
Governance8&9, 2) Rizwan Hameed Butt, FCMA
Importance of Sustainability Reporting Strategy8&9, 3) Risk Senior Director Internal Audit
Management8&9, and (Compliance & Risk),
In addition to statutory compliance, sustainability
4) Metrics & Feroz Sons Laboratories Ltd.
reporting has become an inevitable tool:
Targets8&9, which are
• To gain access to capital funding, as almost all global commonly categorized as “Core Content” for these
financial and development institutions have standards. Primarily, IFRS S1 & S2 focus on disclosure of
pledged to allocate billions of funding for climate information about an organization’s sustainability gover-
actions. nance processes; how its risks and opportunities regard-
ing sustainability are managed; and performance
• To attract and retain talent, as younger generations
measurement against the targets it has set. IFRS S1
perceive workplaces that prioritize sustainability
addresses the general requirements, while IFRS S2 focus-
actions to be more captivating and aspirational.
es on thematic or cross-industry requirements on
• To build a corporate reputation for a company that is climate. Furthermore, in addition to IFRS S1 & S2,
determined to fulfill its responsibilities towards the standards of the Sustainability Accounting Standards
environment alongside its stakeholders. Board (SASB)¹0 serve as a source of guidance on indus-
try-specific sustainability risks and opportunities, and
• To create competitive advantage and brand
users can derive disclosure topics and metrics regarding
differentiation, as brands and products linked to
climate from these SASB standards.
sustainability usually outperform in terms
of growth and volumes. Image-1 7
Evolution of IFRS S1 & S2

In June 2023, ISSB issued the first two
sustainability reporting standards². These
standards evolved as a result of development
and consolidation efforts of various entities
across the globe. The ISSB, launched by the
IFRS Foundation in 2021, consolidated the
technical expertise of staff and contents of
Value Reporting Foundation (VRF)³ and
Climate Disclosure Standards Board (CDSB)4. It
is pertinent to mention that both IFRS S1 & S2

ICMA’s Chartered Management Accountant, Nov-Dec 2025