Mandatory ESG reporting in Kenya to begin in 2027, ICPAK reveals
By Maureen Kinyanjui |
This major shift in corporate reporting comes after a phased implementation strategy, with the first phase already underway since January 2024.
Kenya is set to introduce mandatory sustainability reporting for public companies starting in 2027, aligning local firms with global standards for environmental, social, and governance (ESG) performance.
The new initiative, outlined by the Institute of Certified Public Accountants of Kenya (ICPAK), will require firms to adopt the International Financial Reporting Standards (IFRS S2) for sustainability disclosures, making them more transparent, uniform, and globally comparable.
This major shift in corporate reporting comes after a phased implementation strategy, with the first phase already underway since January 2024.
During this phase, all organisations in Kenya were encouraged to voluntarily adopt the sustainability reporting standards.
The second phase, which begins in 2027, will make the standards mandatory for public interest entities (PIEs)—companies whose operations significantly impact the economy and public welfare.
According to ICPAK Chairman Philip Kakai, public interest entities include large organisations whose failure or misconduct could have widespread consequences, including disruptions to the financial system and harm to numerous stakeholders.
"The adoption of the IFRS Sustainability Disclosure Standards in a phased approach will ensure a smooth transition for organisations of all sizes," Kakai stated, noting that the gradual rollout will allow companies to adjust to the new requirements.
Larger non-public interest entities (non-PIEs) will have an additional year, with mandatory reporting for them set to start in 2028. For smaller organisations, known as SMEs, the mandatory adoption of the standards will begin in 2029.
A readiness assessment will be conducted for all organisations before the initial sustainability disclosures are made, ensuring that they are fully prepared to meet the new reporting requirements.
ICPAK CEO Grace Kamau highlighted that the new standards would provide investors, regulators, and other stakeholders with the reliable, transparent information they need to make more informed decisions.
"These standards will enhance the decision-making process by ensuring that sustainability data is comparable and trustworthy," Kamau said.
The full timeline for integrating public sector entities into the sustainability reporting framework has yet to be determined by ICPAK, but the ongoing phased approach promises to gradually elevate sustainability transparency across all sectors.
By 2027, Kenya will join a growing number of countries requiring standardised sustainability reporting, creating a global benchmark for businesses to follow as they enhance their environmental and social responsibility practices.
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