Firms in Kenya will from 2027 directly compare their performance on environmental, social and governance (ESG) initiatives with global firms as the country adopts reporting under a common standard.
The country has adopted the new reporting under the International Financial Reporting Standards (II) (IFRS S2), designed to make public disclosures uniform, transparent, and easy to compare globally.
The Institute of Certified Public Accountants of Kenya (ICPAK) has set January 1, 2027, as the commencement date for the mandatory adoption of sustainability reporting under the IFRS.
Under phase one which began in January 2024, all organisations were required to adopt the sustainability reporting standards voluntarily.
While in phase two, which is the mandatory for public interest entities (PIEs), large non-PIEs will have an extra one year to be on boarded and will commence in 2028.
Public interest entities (PIEs) are organisations that have a significant influence on the public and economy due to their size, complexity, or nature of operations and are therefore subject to heightened regulatory and transparency requirements.
PIEs typically include companies whose failure or misconduct could disrupt the financial system or harm large groups of stakeholders, including the public.
ICPAK Chairman Philip Kakai said that the adoption of the IFRS Sustainability Disclosure Standards in a phased approach would ensure a smooth transition for organisations of all sizes.
For the SMEs that are non-public interest entities, mandatory onboarding will begin on January 1, 2029.
However, phase 3 that will incorporate timelines for Public Sector Entities is yet to be determined by ICPAK.
“This approach will allow organisations to build capacity, gather necessary data, and align their internal processes with the new standards,” said ICPAK Chairman Philip Kakai.
Before the adoption, all organisations will undergo a readiness assessment before the initial sustainability disclosures are published.
ICPAK CEO Grace Kamau said
these standards would allow
investors, regulators, and other
stakeholders to make better-informed decisions based on reliable and
transparent sustainability information.
