JSE Updates ESG Reporting Guidelines to Align with Global Standards

The Johannesburg Stock Exchange (JSE) has updated its ESG reporting guidelines to align with the IFRS S1 and S2 standards issued by the International Sustainability Standards Board (ISSB). This update aims to enhance transparency and reduce reporting burdens for companies in South Africa. Originally based on frameworks such as TCFD and GRI, the 2022 guidelines helped local companies simplify their ESG reporting. However, with the introduction of the new IFRS standards in 2023, the guidelines were revised to incorporate these global standards and reflect changes in South Africa's legislation, ensuring companies stay compliant both locally and internationally.

The Johannesburg Stock Exchange (JSE) has completed its review of the ESG reporting guidelines, aligning them with the IFRS S1 and S2 standards issued by the International Sustainability Standards Board (ISSB). This initiative aims to enhance transparency and reduce the reporting burden for companies operating in South Africa.

Previously, in 2022, JSE released its first guidance, which was based on leading international frameworks such as TCFD and GRI. It focused on simplifying the ESG reporting process for organisations operating in the South African market and helped them align with global standards. However, with the introduction of the new IFRS S1 and S2 standards in 2023, the guidance was updated to integrate these international requirements and reflect changes in South Africa's legislative context.

Key Changes in the Guidelines

  1. Standardisation of Frameworks
    The updated guidelines incorporate sustainability principles outlined in IFRS S1 and S2, streamlining the reporting process for organisations. This standardisation reduces complexity and makes it easier for companies to align with international sustainability standards. It also ensures that the reporting aligns with emerging global trends in sustainability disclosure, further supporting transparency for investors and stakeholders;
  2. Flexibility for Companies
    To ease the transition to the new guidelines, companies are granted an exemption from disclosing Scope 3 emissions during the first year of implementation. This provides businesses with time to prepare and collect the necessary data, ensuring that they are not overwhelmed by immediate reporting requirements. This measure aims to prevent undue burden while still pushing for enhanced transparency in the long term;
  3. Alignment with Local and Global Requirements
    The recommendations now reflect South Africa’s evolving legislative context, including the recent amendments to the Companies Act signed by President Cyril Ramaphosa. This ensures that JSE-listed companies are compliant with both local laws and international standards, providing a cohesive approach to corporate governance and ESG reporting.

These updates replace the 2022 JSE Guidance, which was initially based on frameworks such as TCFD and GRI, ensuring a more unified and streamlined approach to ESG reporting.

Basic Principles of the 2022 JSE Guidance That Remain Unchanged

While significant updates have been made to align with the latest global standards, several fundamental aspects of the 2022 JSE Guidance remain intact:

  • Focus on Materiality: The guidelines continue to stress the importance of materiality in ESG disclosures. Companies are encouraged to focus on the sustainability issues most relevant to their operations and stakeholders, ensuring that the information disclosed has real value for decision-making;
  • Transparency and Consistency: Consistency in reporting remains a core principle, ensuring that companies disclose their ESG activities in a clear, understandable, and comparable way. Transparency is critical for maintaining investor confidence and fostering long-term relationships;
  • Governance and Accountability: The 2022 guidelines emphasize strong governance structures and accountability at the board level for ESG issues. Companies are expected to integrate ESG considerations into their governance frameworks, ensuring that these issues are treated with the same level of importance as financial matters;
  • Alignment with Established Frameworks: The JSE guidance continues to be based on leading sustainability frameworks, such as TCFD and GRI. This alignment allows companies to provide comprehensive, internationally recognised reports that are valuable to global investors and stakeholders.

Impact on Corporate Governance

Recent amendments to the Companies Act have introduced stricter requirements to enhance transparency and corporate accountability. Among the changes are measures to ensure greater disclosure of executive remuneration, strengthen the role of social and ethics committees, and integrate ESG considerations into corporate strategies.

Dr Leila Fourie, CEO of the JSE, emphasised that the updated guidelines also reflect emerging standards like TNFD and the GRI Biodiversity Standard. She explained that these updates aim to support businesses in aligning with global sustainability expectations.

Conclusion

The JSE’s revised guidelines underscore its commitment to integrating South Africa into the global sustainability landscape. These standards not only simplify the reporting process but also enable businesses to adapt to evolving regulatory and market conditions.

For businesses, this represents an opportunity to strengthen investor trust, improve transparency, and ensure long-term resilience in a competitive global market.