Modern Quarrying Q3 2024

definition of ‘IFRS’ in the Companies Regulations could be updated to include the ‘ISSB’, as the definition currently only refers to the ‘IASB’). Third, in terms of application, a mandatory ESG reporting regime would likely apply to a wider range of companies than currently captured, create more specificity around the content of disclosures (although materiality would still matter), and could have implications for legal liability for non-compliances, non-disclosures or misstatements. In March 2024, the Chair of the ISSB met with leaders in Kenya, Nigeria and South Africa to discuss considerations for the implementation of the ISSB Standards in Africa. Although the path towards adopting the ISSB Standards and/or mandatory ESG disclosures in SA has not yet been clearly paved, boards should keep up with developments taking place globally and should ensure that companies have robust ESG practices in place. Sustainability should not be relegated to a tick-box exercise. l

Many JSE-listed companies have already been reporting on sustainability-related matters in their integrated reports or as part of their annual reporting suite. The IFRS Foundation notes that the transition to ISSB Standards may be easier in jurisdictions where guidance has been set on the Integrated Reporting Framework or the recommendations of the TCFD, as important elements of these reporting frameworks and standards are built into ISSB Standards. Nevertheless, the adoption of mandatory ESG disclosures, prepared in accordance with the ISSB Standards, would require significant changes to the existing regime. First, it would require a shift in the mindsets of many South African companies who do not currently perceive sustainability-related or climate-related disclosures to be financial in nature. Second, it would require changes to the existing regulatory regime, which would need to be made to cater to a policy decision to adopt ISSB Standards on a mandatory basis (for example, the

Sustainability-related or ESG disclosures and reporting are currently addressed in the King IV Code on Corporate Governance (King IV) (as part of the integrated reporting framework approach adopted in King IV), which is a set of voluntary principles but is mandatory for JSE-listed entities by virtue of the JSE Listing Requirements. However, King IV does not provide detailed guidance on what sustainability or ESG disclosure standards should be adopted. In 2022, the JSE issued Sustainability and Climate Disclosure Guidance documents, that draw on and are aligned with influential global initiatives on sustainability/ESG and climate change disclosure, including the ISSB’s prototype disclosure requirements (which ultimately informed the final ISSB Standards). On 10 May 2024, SA’s Prudential Authority issued guidance notes to banks and insurers on climate related disclosures, governance, and risk practices, which also draw on the ISSB Standards and recommendations of the TCFD.

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MODERN QUARRYING QUARTER 3 | 2024