How organisations in Kenya should prepare for adoption of IFRS sustainability disclosure standards

Following the release of the roadmap for the adoption of IFRS sustainability disclosure standards in Kenya, the new IFRS sustainability standards IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures) have officially become a part of the country’s sustainability reporting landscape.

The roadmap provides the timeline for the mandatory adoption of the standards for different categories of organisations, with the earliest date being 1 January 2027.

It also provides a timeline for mandatory assurance from an independent external assurance provider, with the earliest date being 1 January 2028.

Therefore, organisations must begin to prepare to embed sustainability across their organisations by understanding the sustainability risks, opportunities and impact affecting them while reporting on the outcomes.

The roadmap requires organisations to perform readiness assessments, which entails evaluating different aspects of an organisation’s preparedness to comply with the reporting requirements of the standards. Some of the factors to consider for preparation include the following:

Investment in capacity building: The importance of creating awareness and the proper understanding for employees of what sustainability means for an organisation and the reporting obligations related to them must be emphasised. It is an important starting point on the journey because it creates the springboard for other programs related to the adoption of the standard by the organisation.

For instance, through the training programs the Board of Directors and senior management can understand their role and begin implementing policies and processes that will ensure accountability across the reporting function.

Data strategy: Sustainability reporting relies heavily on a lot of data. Therefore, organisations will have to develop the right data strategy that helps identify the required data, warehousing, analysis, and delivery of the data to ensure a business-as-usual configuration that enables continuous reporting throughout the entire year and not just at year-end.

Assurance readiness: Organisations must first develop internal audit functions and capabilities to ensure that the substitutability-related information is reliable, accurate, and decision-useful. Investments in the right people, systems, and data technology are essential to provide a robust assurance process that adds value.

Other areas to consider are risk management, stakeholder engagement and the preparation of sustainability disclosure reports.

Akinyemi Awodumila is a Partner at Deloitte East Africa. He is an author who writes and speaks widely on corporate reporting topics