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Business Reporter
In a landmark move towards enhanced corporate transparency and environmental responsibility, Zimbabwe has made sustainability reporting mandatory for all entities listed on the Zimbabwe Stock Exchange (ZSE) and the Victoria Falls Stock Exchange (VFEX).
A joint statement released by the Public Accountants and Auditors Board (PAAB), ZSE, and VFEX on February 20, 2025, outlined the new requirements. Effective for companies’ financial years commencing on or after January 1, 2024, all listed entities must submit sustainability reports in compliance with Statutory Instrument 134 of 2019.
“The requirement to submit sustainability reports ensures that companies remain accountable to stakeholders while providing clear and reliable information on environmental, social, and governance (ESG) issues,” the statement read.
The country’s decision aligns with international trends, following its adoption of the International Financial Reporting Standard (IFRS) Sustainability Disclosure Standards issued by the International Sustainability Standards Board (ISSB) in November 2022.
However, IFRS S1 on General Requirements for Disclosure of Sustainability-related financial information and IFRS S2 on Climate-related Disclosures is not yet mandatory.
“While the adoption of the ISSB standards is a significant step forward, we are currently developing an implementation roadmap to guide companies through this transition,” PAAB noted.
Industry experts have welcomed the move, citing its potential to enhance investor confidence and improve corporate governance.
“Mandatory sustainability reporting will compel companies to integrate ESG considerations into their business strategies. Investors want to see long-term value creation, and transparency in sustainability efforts is now a key factor,” said Tichaona Mabungu, an investment analyst.
Sustainability reporting has become a critical tool for businesses and investors worldwide.
Sustainability reporting is the disclosure and communication of environmental, social, and governance (ESG) goals—as well as a company’s progress towards them.
Through disclosing ESG performance, companies demonstrate their commitment to ethical business practices, risk management, and long-term financial health.
Mr Farai Kashamba, a corporate governance expert noted, “In today’s world, businesses are expected to go beyond profit-making. Investors, customers, and regulators want to understand how companies manage their impact on society and the environment. Failure to report on sustainability could pose reputational and financial risks.”
Furthermore, sustainability disclosures are instrumental in addressing climate-related risks, social inequalities, and corporate ethics. Companies that embrace these principles often experience better stakeholder engagement, increased investor trust, and improved operational efficiencies.
While sustainability reporting is now compulsory, the assurance of these reports is not currently mandated. This means that while companies must prepare and submit their reports, third-party verification remains optional.
Arguments that independent assurance will eventually be necessary to ensure credibility have also been proffered.
“Without external verification, there’s a risk of ‘greenwashing,’ where companies exaggerate or misrepresent their sustainability efforts. Over time, regulatory authorities may need to introduce assurance requirements to strengthen the reliability of these disclosures,” Mr Kashamba added.
As businesses adapt to the new reporting obligations, the local regulatory authorities have urged companies to engage with relevant bodies for clarification and guidance.
The introduction of mandatory sustainability reporting is expected to drive improvements in corporate accountability, risk management, and sustainable growth.
With sustainability now firmly on the agenda, local companies must embrace this shift, ensuring they meet stakeholder expectations while contributing to a more sustainable future.
