Pakistan's Sustainability Reporting Roadmap: What IFRS S1 and S2 Mean for Your Company

Sustainability reporting in Pakistan has moved beyond voluntary ESG discussion. The Securities and Exchange Commission of Pakistan (SECP) has adopted the IFRS Sustainability Disclosure Standards:

• IFRS S1 — General Requirements for Disclosure of Sustainability-related Financial Information
• IFRS S2 — Climate-related Disclosures

Implementation is phased by company size, and the first phase is already live.

The three phases

Phase I — annual reporting periods beginning on or after 1 July 2025.Listed companies meeting any two of the following:

• Turnover exceeding Rs. 25 billion
• More than 1,000 employees
• Total assets exceeding Rs. 12.5 billion

Phase II — annual reporting periods beginning on or after 1 July 2026.Listed companies meeting any two of the following:

• Turnover exceeding Rs. 12.5 billion
• More than 500 employees
• Total assets exceeding Rs. 6.25 billion

Phase III — annual reporting periods beginning on or after 1 July 2027.The requirements extend to:

• Remaining listed companies
• Non-listed Public Interest Companies licensed or registered with the SECP

If your company falls in Phase II, the reporting period that began on 1 July 2026 is already running.

Transition provisions

The framework provides relief in the early years:

• Timing — sustainability reporting within nine months of the financial year-end in the first year of compliance, where applicable
• Scope 3 emissions — Scope 3 greenhouse gas disclosures from the second year of reporting
• Assurance — assurance on sustainability reporting from the second year, in accordance with the applicable requirements and standards

The second-year assurance requirement is the one to plan around. Information that will be assured has to come from processes that can be tested, and those processes take longer to build than the first report does to write.

Why this is a finance issue, not a communications one

Sustainability reporting under these standards is not limited to measuring carbon emissions.

IFRS S1 focuses on sustainability-related risks and opportunities that could reasonably be expected to affect an entity's cash flows, access to finance or cost of capital. IFRS S2 addresses climate-related risks and opportunities specifically.

That framing brings sustainability information alongside financial reporting, governance, risk management and strategic decision-making. It means the finance function and the audit committee own this as much as anyone.

What companies need to consider

• Data ownership and reporting controls — who owns each metric, and how it is captured
• Reliability of sustainability-related information — can the numbers be reproduced and evidenced?
• Governance and management oversight — board and committee responsibility over sustainability matters
• Integration with financial reporting processes — the same calendar and the same discipline as the financial statements
• Assurance readiness — building the audit trail before the assurance provider arrives

The practical change

The question is moving from "Do we need to discuss sustainability?" to "Can our sustainability information be measured, supported, controlled and relied upon?"

For Pakistani businesses connected to international investors, lenders and supply chains, this is an important development in the evolution of corporate reporting — and those counterparties may ask for this information ahead of the local timetable.

Where to start

• Confirm your phase against the thresholds.
• Perform a gap assessment against IFRS S1 and IFRS S2.
• Assign ownership of each data point and the controls around it.
• Build the reporting process to an assurance standard from year one, rather than retrofitting it in year two.