Pakistan has made IFRS S1 and S2 mandatory for listed companies in three phases from July 2025. Here is who reports when, what the standards require and how to get your data ready for assurance.
General information only. This article summarises rules, standards and effective dates as we understand them in October 2026. It is not tax, accounting or audit advice for your specific situation. Talk to us before making decisions.
What the SECP has required
On 31 December 2024 the SECP notified the adoption of the ISSB's IFRS Sustainability Disclosure Standards: IFRS S1 (general requirements for sustainability-related financial information) and IFRS S2 (climate-related disclosures). Adoption is phased by company size:
| Phase | Annual periods beginning on or after | Who reports |
|---|
| Phase I | 1 July 2025 | Listed companies meeting any two of: turnover above Rs 25 billion, more than 1,000 employees, total assets above Rs 12.5 billion |
| Phase II | 1 July 2026 | Listed companies meeting any two of: turnover above Rs 12.5 billion, more than 500 employees, total assets above Rs 6.25 billion |
| Phase III | 1 July 2027 | All other listed companies, and certain unlisted public sector companies licensed or registered with the SECP |
For companies with a June year end, Phase I companies are reporting now, for the year to 30 June 2026, and Phase II companies are already in their first reporting year. Early adoption is encouraged for everyone.
Key reliefs and requirements
- Scope 3 emissions: required from the second year of reporting.
- Assurance: the auditor's assurance on sustainability information applies from the second year of reporting, under standards adopted by ICAP.
- Location: the sustainability report forms part of the annual report, after the directors' report, and is approved by the board in the same way as the financial statements.
What IFRS S1 and S2 ask for
Both standards follow four pillars, familiar from the TCFD recommendations:
GovernanceHow the board and management oversee sustainability and climate risks and opportunities.
StrategyHow those risks affect the business model, cash flows, financing and financial position, including climate resilience.
Risk managementHow risks are identified, assessed, prioritised and monitored, and how this fits overall risk management.
Metrics and targetsScope 1, 2 and later scope 3 greenhouse gas emissions, industry metrics and progress against targets.
The disclosures must cover the same reporting entity and period as the financial statements, and be connected to them. Assumptions about energy prices, carbon costs or water availability should be consistent with those used for impairment testing and going concern.
Why it matters beyond compliance
- Exporters: buyers in Europe and elsewhere increasingly ask Pakistani suppliers for emissions data, and the EU's carbon border rules raise the stakes for some sectors.
- Financing: banks and development finance institutions use climate data in lending decisions and green financing.
- Climate exposure: Pakistan faces significant physical climate risks, such as floods, heat and water stress, which investors expect boards to explain.
- Supply chains: unlisted suppliers of reporting companies will be asked for their own data to support scope 3 figures.
How to prepare
- Confirm your phase: test the thresholds against your last two years' turnover, employees and assets.
- Gap assessment: compare current ESG and annual report disclosures with IFRS S1 and S2.
- Emissions inventory: set the boundary and collect fuel, electricity and process data for scope 1 and 2, then plan for scope 3.
- Risks and scenarios: identify material sustainability and climate risks and run scenario analysis proportionate to your size.
- Controls: put the same controls, sign-offs and audit trail around sustainability data as around financial data, ready for assurance in year two.
- Board ownership: brief the board and audit committee, and agree who owns each disclosure.
How Quantum Axis helps
We run IFRS S1 and S2 gap assessments, build emissions and sustainability data templates, draft disclosures connected to your financial statements, and prepare your controls and evidence for auditor assurance. Our internal audit team can test sustainability data controls before your auditors do.
Getting ready for sustainability reporting?
Book a free consultation and we will assess your gaps and timeline.
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