IFRS S1 and S2 in Pakistan: Is Your Company Ready for Sustainability Reporting?

Investors and lenders increasingly want to know how climate and other sustainability risks affect a company's prospects. The IFRS Sustainability Disclosure Standards — IFRS S1 (general requirements) and IFRS S2 (climate-related disclosures) — provide a global baseline, and SECP has adopted them in Pakistan in phases for listed companies and for non-listed public interest companies that it licenses.

SECP's phased approach

SECP's order of 31 December 2024 applies the standards to listed companies and SECP-licensed non-listed public interest companies in phases, with the first two phases based on turnover, number of employees and total assets:

• Phase I — annual periods beginning on or after 1 July 2025, for the largest listed companies meeting the size criteria (for example turnover above Rs 25 billion, more than 1,000 employees or total assets above Rs 12.5 billion — two of three).
• Phase II — annual periods beginning on or after 1 July 2026, with lower thresholds (turnover above Rs 12.5 billion, more than 500 employees, total assets above Rs 6.25 billion).
• Phase III — annual periods beginning on or after 1 July 2027, for all other listed companies and for non-listed public interest companies licensed by SECP.

Check SECP's notification for the exact criteria that apply to your company. Other unlisted companies are not required to report, but many are asked for climate data by banks, export customers and listed parents.

What the standards require

Both standards are organised around four pillars:

1. Governance — how the board and management oversee sustainability risks and opportunities.
2. Strategy — how those risks affect the business model, cash flows and plans.
3. Risk management — how they are identified, assessed and managed.
4. Metrics and targets — including, under IFRS S2, greenhouse gas emissions.

A five-step readiness plan

1. Confirm applicability and your first reporting period.
2. Assign ownership at board and management level.
3. Assess risks — physical (heat, floods, water) and transition (energy prices, regulation, customer demands).
4. Build the data — energy use, emissions and other metrics, with controls as robust as for financial data.
5. Draft and dry-run the disclosures a year ahead, so the first published report is not the first attempt.

Our accounting and financial reporting practice helps listed and supply-chain companies get ready, and our corporate advisory practice helps boards set up the governance and controls behind the data. Start the conversation.