The worldwide movement towards standardized sustainability reporting is growing stronger and more widespread. IFRS S1 and S2 are now implemented in more jurisdictions, with thirty-six countries planning to adopt them. Institutional investors are also demanding stricter disclosure standards. For African companies aiming for international funding, the push to meet these requirements is now very real.
The issue is that the frameworks being used were not created for the environments in which most African companies operate.
IFRS S1 and S2 are based on frameworks such as TCFD, SASB, and ISSB, which were primarily designed for large public companies operating in stable, high-income economies with advanced data systems and formal supply chains. While these frameworks are effective in such environments, they encounter fundamental structural mismatches in Africa that cannot be fixed through compliance alone.
Supply chains in most of sub-Saharan Africa often involve smallholder farmers, informal traders, and community producers—these actors make up over 80% of regional businesses and significantly influence environmental and social outcomes. However, standard ESG frameworks require detailed Scope 3 emissions data and supply chain due diligence, which these networks cannot reliably provide. This gap is not due to dishonesty but stems from a mismatch between framework requirements and the operational reality.
The same issue occurs in social impact measurement. A telecom company providing connectivity to underserved rural areas creates genuine social value. However, if this work is distributed through informal networks and community intermediaries, it often doesn’t show up in the supply chain assurance models used by Western investors to evaluate ESG credibility. The impact is genuine, but the data is incomplete. As a result, the company faces penalties for this gap.
This poses a practical challenge for African companies adopting IFRS. Organisations that merely copy Western frameworks, completing templates, conducting gap analyses, and generating reports, often produce disclosures that are technically compliant yet potentially misleading about the company’s true operations. They fulfil the formal requirements without reflecting the actual substance of what the company is doing.
Organizations that effectively navigate this process adopt a different approach. They start with materiality — pinpointing the specific environmental and social factors truly relevant to their operations and context, instead of relying on a generic template. They disclose accurate information, including acknowledging where their data is incomplete and explaining why. Furthermore, they craft their narrative based on their actual operating environment rather than forcing an external framework onto it.
This is not an argument against adopting IFRS. Instead, it advocates for implementing it honestly—by developing disclosure frameworks tailored to African operational contexts rather than copying those from markets with vastly different regulatory, social, and infrastructure landscapes. The standard is worth striving for, but the approach to achieving it must be suited to the specific circumstances you face.