Omega Ukama 
THE Public Accountants and Auditors Board of Zimbabwe (PAAB) has decided on the early adoption of the International Financial Reporting Standards (IFRS) sustainability disclosure standards to be issued by the International Sustainability Standards Board (ISSB), Finance minister Mthuli Ncube has said.
The ISSB is a standard-setting board that was established by the IFRS foundation in 2021 to help meet investors’ increasing demand for high-quality reporting by companies on climate and other environmental, social and governance (ESG) matters.
African Finance ministers announced their support for the ISSB’s work in September of this year, citing that early adoption by African jurisdictions and companies has the potential to attract more investment and boost private sector development in Africa.
In a notice last week, Ncube said Zimbabwe was formalising its support through early adoption of the standards.
“Taking a cue from the communique issued by the African ministers of finance… the accountancy profession in Zimbabwe and indeed the government of Zimbabwe endeavours to meet the needs of capital markets and other stakeholders and enhance transparency, accountability, efficiency, and comparability in business.”
“This (early adoption) has the potential to attract more investment and boost private sector development in Zimbabwe in line with the National Development Strategy (NDS1) macroeconomic framework premised on programmes aimed at achieving economic transformation through the creation of a thriving private sector led, open and competitive economy,” the minister said, adding that early adoption could help unlock and bring to the country capacity building and support.
“Further, Zimbabwe and indeed Africa’s voice will be amplified in the standards development process.”
The minister urged ISSB to work “closely” with the PAAB and to provide “strong advisory” and capacity-building support to achieve early adoption of the standards.
“Jurisdictional standard-setting in the field of sustainability-related financial disclosures is a relatively new discipline and many jurisdictions, including Zimbabwe, are participating in this process at scale for the first time.”
This follows warnings by experts that Zimbabwe faced the loss of export markets if regulators and businesses did not prioritise ESG matters more.
Regulators around the world have been shifting ESG principles from a moral responsibility to a mandatory legal requirement.
ESG covers the major aspects of socially-responsible investments, and it is a framework for assessing the impact of the sustainability and ethical practices of an organisation.
Some regulators and businesses in the country have already started implementing ESG protocols, but the country still has some ways to go before it gets up to speed with the rest of the world, according to Rodney Ndamba, the chief executive of the Institute for Sustainability Africa.
“As a country, our exports are likely to fail to access high-value international markets because of the high sustainability standards, which are expected in some of the markets,” Ndamba told the Institute of Chartered Accountants of Zimbabwe’s winter school earlier this year.
“We could end up being forced to sell to low-value markets and fetch little for our merchandise.”
He said the cost of borrowing is now also tied to sustainability, “because lenders and financial institutions also have to cover themselves in terms of sustainability”.
Zimbabwe’s financial services sector has already started integrating sustainability and climate change principles, while the Insurance and Pensions Commission (Ipec) said it was coming up with an ESG guideline for the industry.
Ipec board chairman Albert Nduna said the commission was in the process of framing ESG guidelines that were specific to the insurance and pension industry.
“This will be rooted in prescribed assets whose goal is to balance return on capital and developmental role,” he said in the regulator’s 2021 annual report.
Zimbabwe Insurance and Pensions Apex Council chairman David Nyabadza said the industry had already made significant strides.
“A lot of our players, particularly those listed on the Zimbabwe Stock Exchange, are doing a lot in the sustainability space,” he told The Financial Gazette recently.
Meanwhile, the Zimbabwe Stock Exchange (ZSE) said it will soon make it mandatory for listed companies to report on sustainability and climate change issues as businesses around the world come under increasing pressure to shift to a more socially-conscious form of stakeholder capitalism.
