SUPPORTING SOUTH AFRICA’S REGULATOR ON ITS SUSTAINABILITY DISCLOSURE STRATEGY
Robert Black and Dr. Rory Sullivan
Over the past year Chronos has conducted several research and capacity building activities for South Africa’s Financial Sector Conduct Authority (FSCA). In collaboration with The IFC’s Integrated ESG Program and Kigoda Consulting, the project has focussed on examining the role of climate disclosure requirements in supporting FSCA’s regulatory and supervisory mandate.
The main outcome of the project was a research and analysis report, which informed recommendations on how FSCA can develop and implement climate disclosure requirements for retirement funds, Collective Investment Schemes (CIS) and large listed corporates. The key deliverables included:
Specific recommendations for FSCA on the design and implementation of climate disclosure regulation.
Contextual information covering:
o The global and South African climate disclosure landscape.
o Benchmarking the reporting practices of a sample of regulated entities against IFRS S2.
o A comparative analysis of climate disclosure approaches in other jurisdictions.
The research and analysis revealed the following key insights:
South Africa recognises climate as a critical risk, and regulators have a responsibility to manage that risk. Some voluntary climate disclosure guidance has been issued (e.g. JSE’s 2022 Sustainability and Climate Disclosure Guidance).
Many country regulators are adopting climate disclosure requirements, increasingly these are aligned with ISSB’s IFRS S2 and mostly intended to become mandatory.
South Africa’s regulatory environment for financial institutions related to climate change is already falling behind some jurisdictions and without action will fall further behind.
South Africa’s large, listed corporates appear to have a foundation of climate reporting that should allow them to adopt the requirements of IFRS S2. Reporting amongst the pension funds and collective investment schemes was much more limited.
The FSCA Sustainable Finance Update Report 2025 has now been published and sets out FSCA’s programme of work. In light of the research findings, one of four key updates committed to is to “consult on the introduction of corporate sustainability disclosure requirements, with an initial focus on mandatory climate disclosure requirements for large, listed corporates.”
At Chronos we welcome FSCA’s decision to pursue mandatory climate disclosure requirements for large, listed corporates. The thorough research undertaken has empowered the FSCA to make informed decisions, such as prioritising entities that are most ready to report. This will include a voluntary period to build capacity and encourage early adoption. The research also supports the FSCA in developing a targeted consultation that addresses key issues for effective implementation. Additionally, it has highlighted the areas where further work is needed before requirements for other regulated entities (e.g. pension funds) can be phased in.
