Environmental, Social and Governance (ESG) reporting is transitioning from a voluntary best-practice exercise to a formal regulatory requirement for a growing number of South African businesses. Understanding what is changing — and when — is essential for any organisation that wants to stay ahead of compliance obligations.
What Is Driving the Change?
Globally, regulators and investors are demanding greater transparency about how businesses manage climate risk, social impact, and governance standards. South Africa is aligning with these international trends through the Johannesburg Stock Exchange's sustainability disclosure requirements and the increasing expectations set by the International Sustainability Standards Board (ISSB).
The JSE now requires listed companies to report against IFRS S1 (general sustainability disclosures) and IFRS S2 (climate-related disclosures), with a phased implementation schedule that is bringing more entities into scope each year.
Key Areas of Focus for 2026
Climate-Related Financial Disclosures: Businesses need to quantify and disclose how climate change affects their financial position — from the physical risks of extreme weather to the transition risks associated with moving to a lower-carbon economy.
Social Reporting: Fair labour practices, transformation targets (B-BBEE), employee wellbeing, and community impact are all under greater scrutiny. Investors want evidence that these commitments are genuine and measurable.
Governance Transparency: Board composition, remuneration policies, and anti-corruption measures must be disclosed clearly and consistently.
Practical Steps for Businesses
Whether you are listed or unlisted, the trend toward ESG transparency will affect your business. We recommend starting with a materiality assessment — identifying which ESG issues are most relevant to your operations and stakeholders — and then building a baseline data collection process.
J Rawat and Company Inc can assist with the financial and governance dimensions of your ESG reporting journey, ensuring your disclosures are accurate, consistent, and aligned with applicable standards.