The Institute of Certified Public Accountants of Kenya (ICPAK), established in 1978 under the Accountants Act No.15 of 2008, serves as the statutory body for setting standards and regulating the accountancy profession in Kenya. As a member of the Pan African Federation of Accountants (PAFA) and the International Federation of Accountants (IFAC), ICPAK is committed to maintaining high standards in financial and non-financial reporting.
On 6 September 2023, ICPAK announced the intention to adopt the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards, called S1 (Sustainability-related disclosures) and S2 (Climate-related disclosures), in Kenya. This significant event was attended by key stakeholders, including regulators, corporate users, preparers, representatives from PAFA, the African Union, International Sustainability Standards Board (ISSB) and the IFRS Foundation.
Currently, organizations worldwide face the challenge of navigating multiple fragmented sustainability reporting frameworks. Kenya, too, has experienced various sustainability initiatives, including:
- Nairobi Securities Exchange Environmental, Social, and Governance Disclosure Guidance
- Code of Corporate Governance Practices for Issuers of Securities to the Public by the Capital Markets Authority
- Sustainable Finance Initiative Industry Principles for the banking sector
- Guidance on Climate-Related Risk Management for the banking sector by the Central Bank of Kenya
Despite these initiatives, the absence of a unified reporting framework has hindered comparability. ICPAK, in collaboration with ISSB, is spearheading the adoption of a global baseline for sustainability-related disclosures that will provide consistent and comparable information for investors and other market participants.
A. Establishment of a Committee
ICPAK as the Kenyan standard setter, commenced collaboration with industry players, regulators, development partners and other stakeholders to ensure preparedness towards adoption of the IFRS Sustainability Disclosure Standards. To facilitate this, ICPAK established a Multi-Stakeholder Sustainability and Climate Change Reporting Committee to develop a Roadmap for Adoption of IFRS Sustainability Disclosure Standards in Kenya.
B. Phased Approach to Adoption
ICPAK requires the adoption of the IFRS Sustainability Disclosure Standards in a phased approach to ensure a smooth transition for organizations of all sizes as provided below. This approach will allow organizations to build capacity, gather necessary data, and align their internal processes with the new standards.
Phase | Timelines (Accounting period beginning on or after) | Organisations Involved |
Phase 1 – Voluntary Adopters | 1 January 2024 | All organisations |
Phase 2 – Mandatory Adoption | 1 January 2027 | Public Interest Entities (PIEs) |
1 January 2028 | Non-PIEs (Large Enterprises) |
1 January 2029 | Non-PIEs (SMEs) |
Phase 3 – Government Organisations | To be determined by ICPAK | Government organisations |
C. Next Steps and Call to Action
ICPAK calls on all Kenyan organizations to:
- Build Internal Capacity: Train staff, develop robust systems for data collection and sustainability reporting.
- Engage Stakeholders: Actively communicate with investors, customers, employees, and other stakeholders to foster understanding and support for sustainability initiatives.
- Leverage ICPAK Resources: Utilize the guidance, tools, and training programs provided by ICPAK for successful transition.
ICPAK remains committed to supporting Kenya and all entities within the jurisdiction in understanding and implementing the IFRS Sustainability Standards. Through ongoing training, guidance, and advocacy, ICPAK aims to facilitate a seamless transition to these standards, ultimately contributing to a more sustainable and resilient economy.