Sustainability reporting is evolving. What was once largely voluntary, narrative-led and often handled separately from financial reporting is becoming more structured, more rigorous and more closely linked to business performance, risk and access to capital.
That was the central message from SNG Grant Thornton’s recent Sustainability Africa Dialogues webinar entitled Bridging the Readiness Gap: Turning IFRS S1 and S2 into Action. The webinar panel discussion brought together perspectives from capital markets, regulation, ESG data, technology and sustainability implementation, and the result was a clear message for South African organisations that IFRS S1 and S2 readiness cannot be put off as a future issue - it must become a current leadership priority.
IFRS S1 and IFRS S2 are the first sustainability disclosure standards issued by the International Sustainability Standards Board. IFRS S1 sets out general requirements for companies to disclose sustainability-related risks and opportunities that could affect cash flows, access to finance or cost of capital. IFRS S2 focuses specifically on climate-related risks and opportunities. Together, they are designed to give investors more consistent, comparable and useful sustainability information.
For many organisations, these IFRS standards represent a significant shift. Sustainability disclosure can no longer only be provided in a standalone report or be treated as a reputational exercise. It needs to be connected to governance, strategy, risk management, metrics, targets and financial planning.
Panel moderator Sumaya Jaffer, Associate Director: Sustainability Advisory Services at SNG Grant Thornton, framed the challenge as one of trust, strategy and preparedness, with boards, investors, regulators and lenders asking tougher questions about sustainability data and climate risk.
From a capital markets perspective, Loshni Naidoo, Chief Sustainability Officer at the Johannesburg Stock Exchange, highlighted several readiness challenges. These include access to the right data, the systems and controls needed to manage that data, funding, skills and the ability to connect sustainability information with financial reporting.
This point was echoed throughout the discussion. IFRS S1 and S2 readiness is not just a reporting exercise; it requires a change in how organisations manage information and make decisions. Sustainability teams, finance teams, risk functions, operations and executive leadership will need to work more closely together, with clear ownership of data and disclosures.
Chuma Zwane, Senior Investigator at the Companies and Intellectual Property Commission explained that the regulatory direction is also becoming clearer. “South Africa is actively preparing for a more standardised sustainability reporting environment,” he said. The current focus, he noted, is on readiness and market support rather than immediate enforcement, but the direction is towards greater structure, consistency and accountability.
One of the most practical and recurring themes from the panel was data. Deepshikha Dalchand, Head of ESG Solutions at Goviva, noted that ESG data remains one of the biggest barriers to readiness. She pointed out that, in many organisations, data is still highly fragmented across departments, locations and formats. This creates obvious challenges for validation, assurance and comparability when IFRS compliance becomes a requirement. “Without reliable data, sustainability disclosures will struggle to meet the same standards of credibility, assurance and scrutiny as financial information,” Dalchand noted. “Poor data will not only weaken reporting; it will also make it harder to assess risks, measure progress against targets, understand carbon-related costs and respond to investor scrutiny.”
Environmental Sustainability Expert, Dr Ernst Swartz, echoed her sentiments, emphasising that organisations should start with their data, not their reports. “Reliable, traceable data provides the foundation for governance, targets, assurance and decision-making,” he argued, “so without it, sustainability disclosures risk becoming descriptive rather than useful.”
Another area where the panellists were in strong agreement was that organisations cannot afford any further delays. Even though formal penalties for IFRS non-compliance are not yet in place, weak disclosure still carries real risks. Investors, partners, civil society organisations and other stakeholders are already asking more detailed questions about climate risk, ESG performance and transition plans. Companies that are unable to provide credible responses face risks that could prove much more expensive than fines or penalties.
For organisations wondering where to begin, the panellists’ practical advice was to first fully understand your current state. Many companies may already have more in place than they realise, especially where they have experience with integrated reporting, risk management or voluntary ESG disclosure. So, the first step is to assess existing data, governance structures, controls, capabilities and gaps.
The bottom line is that IFRS S1 and S2 readiness should not be treated as a compliance project that can be addressed later. It is a core part of building a more resilient, transparent and future-fit organisation. Companies that start now will be better positioned to build trust, respond to regulatory change, strengthen access to capital and make sustainability part of how lasting business value is created.
