eBusiness Weekly
Business Writer
ZIMBABWE has been lauded for making early strides towards the adoption of International Financial Reporting Standards (IFRS), Sustainability Disclosure Standards to be issued by the International Sustainability Standards Board (ISSB) by mid-year 2023.
The country becomes one of the first few African countries to pursue the novel global benchmark for financial reporting.
ISSB standards require companies to report emissions from their direct operations, energy purchases, and from their value chains, including suppliers.
Public Accountants and Auditors Board of Zimbabwe (PAAB) made a resolution for the early adoption of the IFRS Sustainability Disclosure Standards to be issued by ISSB after taking a cue from the communique issued by the African Ministers of Finance on 9 September 2022.
Standard-setting in the field of sustainability related financial disclosures is a relatively new discipline and many jurisdictions, including Zimbabwe, are participating in this process at scale for the first-time.
The new standard requires financial statements and sustainability disclosures to be published at the same time.
In that regard, Zimbabwe resolved to be an early adopter of the IFRS sustainability disclosure standards when they are finalised and issued by the ISSB.
Issues around Environmental Social Governance (ESG) and circular economy have lately become a priority for companies in order to enhance their visibility to the investor community, as they have become a determinant factor in investors’ choice of investments.
Early adoption will likely unlock and bring capacity building and support to the country as the accounting profession prepares for implementation.
Speaking at a breakfast meeting on International Sustainability Reporting Standards convened by Stanbic Bank, Erkki Liikanen, the chairperson of trustees of the IFRS Foundation and former Governor of the Bank Finland (2004 -2018), said his organisation sets out to release material information about sustainability-related risks, opportunities, and general reporting requirements, especially on IFRS Sustainability Disclosure Standards.
He said African countries particularly Nigeria and Zimbabwe, were the first-movers to declare early adoption of the standard at the COP27 assembled last year in November.
“IFRS will help with transition planning with regards to emissions targets and use of carbon offsets as well as disclosure of material information about sustainability-related risks and opportunities. Emphasis will be put on consistency and connections between financial statements and sustainability disclosures.
“We will be working closely with early adopter regulators and others across the region and establish a partnership framework to support capacity building in jurisdictions,” said Liikanen.
Stanbic chief executive, Solomon Nyanhongo, said the strides towards adopting the initiative by Zimbabwe give the country higher visibility to investor community as trends to continue to shift.
“The early adoption of the International Sustainability Standards by Zimbabwe is an exciting development, as we are one of three African countries (together with Nigerian and Egypt), it puts us on the map as a nation eager of doing the right thing.
“This early adoption will require all the stakeholders to be involved and present in all discussions relating thereto, to make sure that we do it right,” said Nyanhongo.
Institute for Sustainability Africa chief executive, Rodney Ndamba, extolled Zimbabwe for taking early steps on issues regarding Environmental Social Governance citing that the world was fast shifting to be environmentally sensitive.
He indicated that one of the world’s luxury car producers, Porsche in 2021 warned its suppliers to produce parts with a sustainable energy mix or risk being removed from the suppliers list.
“Sustainability is the biggest economy of our time so it is up to us to benefit out of it,” said Ndamba.
Another expert in the field Tinashe Rwodzi, said now that Zimbabwe had taken the sustainability route it was important to build more awareness on the subject across the economy and capacity building.
Finance and Economic Development Minister, Professor Mthuli Ncube, is on record saying the accountancy profession in Zimbabwe and the Government of Zimbabwe endeavours to meet the needs of capital markets and other stakeholders and enhance transparency, accountability, efficiency, and comparability in business.
“This has the potential to attract more investment and boost private sector development in Zimbabwe in line with the National Development Strategy (NDSI) macroeconomic framework premised on programmes aimed at achieving economic transformation through the creation of a thriving private sector led, open and competitive economy.
“We, therefore, urge the ISSB to work closely with Public Accountants and Auditors Board of Zimbabwe, as a first mover and to provide strong advisory and capacity building support to achieve early adoption and implementation of the Sustainability Standards,” said Mthuli.
The world’s natural state continues to deplete given the use of fuels and mechanisms that lead to the emission of toxic greenhouse gases which have been cited as major contributors to climate change.
This has prompted the crafting of initiatives designed to monitor value chain processes to curb misdemeanors like modern-day slavery which is the latest concept on the social side of the ESG where individuals who work barefooted, some getting slave wages, and many other malpractices have all been classified as “modern slavery”
Numerous institutions, such as the Sustainability Accounting Standards Board (SASB), the Global Reporting Initiative (GRI), and the Task Force on Climate-related Financial Disclosures (TCFD) are working to form standards and define materiality to facilitate the incorporation of these factors into the investment process.
