Climate reporting framework in Zimbabwe

NATALIE CHIDO MUSVAIRE

Zimbabwe is increasingly vulnerable to climate change, facing prolonged droughts and erratic rainfall.

In this context, climate transition plans have become essential not just as environmental pledges, but as strategic tools for resilience, competitiveness, and alignment with global sustainability goals.

Two major frameworks now guide climate-related financial reporting: the Task Force on Climate-related Financial Disclosures (TCFD) and the IFRS S2 Climate-related Disclosures Standard, developed by the International Sustainability Standards Board (ISSB).

The TCFD, established in 2015 by the Financial Stability Board (FSB), was designed to help companies disclose climate-related financial risks in a consistent and comparable way.

It quickly gained global traction, with 78% of the S&P 500, 82% of the STOXX 600, and 98% of the FTSE 100 adopting it by 2024. In Zimbabwe, TCFD served as a foundational tool for early adopters of climate reporting. Its four-pillar structure Governance, Strategy, Risk Management, and Metrics & Targets enabled businesses to integrate climate risks into operational planning.

These pillars encouraged transparency on board oversight, strategic implications, risk management processes, and emissions metrics, including Scope 1, 2, and 3 greenhouse gases.

However, TCFD remained a voluntary framework, and its implementation varied across jurisdictions. In July 2023, the FSB announced that TCFD had completed its mandate, transferring oversight to the IFRS Foundation. The ISSB then introduced IFRS S2, building on TCFD’s foundation but with more detailed, mandatory disclosure requirements in jurisdictions that adopt it Zimbabwe included.

According to the Public Accountants and Auditors Board (PAAB), Zimbabwe has adopted IFRS S1 and S2. While implementation is not yet mandatory, the PAAB is developing a roadmap to guide the transition. This move aligns Zimbabwe with global best practices and enhances its ability to attract international investment.

One of the most significant differences between TCFD and IFRS S2 lies in the depth and specificity of disclosures. While TCFD encouraged companies to describe climate-related risks and opportunities, IFRS S2 mandates detailed disclosures on how companies plan to meet their climate targets. This includes structured transition plans, use of carbon credits, industry-specific metrics, and financed emissions for financial institutions. Zimbabwean companies must now move beyond broad ESG statements to rigorous, data-backed strategies.

IFRS S2 also requires both qualitative and quantitative data, using all reasonable and supportable information available at the reporting date. This ensures transparency and credibility, making disclosures more decision-useful for investors, regulators, and stakeholders. Companies must now demonstrate not only their climate ambitions but also the feasibility of their plans.

Scenario analysis is another area of divergence. TCFD promoted specific scenarios, such as limiting global warming to 2°C.

IFRS S2 allows companies to choose and explain their scenarios, offering flexibility for Zimbabwean firms to tailor analyses to local realities such as agricultural vulnerability or energy access. IFRS S2 also demands more detail on assumptions, dependencies, planned actions, and resource allocation, helping stakeholders assess the credibility of transition plans.

Carbon credits are another focus. IFRS S2 requires companies to disclose the type of credits used (nature-based or technological), the issuing scheme, and assumptions about permanence and additionality. This is especially relevant for Zimbabwe’s mining, agriculture, and energy sectors, where carbon offsetting may play a key role in emissions reduction.

Unlike TCFD, which implied the need for transition plans, IFRS S2 emphasizes disclosure quality rather than mandating the existence of plans.

This allows Zimbabwean companies especially SMEs to improve reporting without the immediate pressure of fully developed strategies. IFRS S2 introduces the principle of proportionality, enabling companies to apply requirements based on their capacity. This ensures inclusivity and scalability across the business landscape.

Zimbabwe’s revised Nationally Determined Contribution (NDC) outlines ambitious climate targets, including a 40% per capita emissions reduction by 2030. These targets align well with IFRS S2, which require structured transition plans, sector-specific metrics, and scenario analyses. Companies in agriculture can report on climate-smart practices, while those in energy or manufacturing can disclose emissions reduction strategies and renewable energy investments. IFRS S2’s emphasis on Scope 1–3 emissions, carbon credit use, and resilience planning provides a structured way to align with national goals.

Across Africa, countries like Nigeria, Kenya, South Africa, and Ethiopia are adopting IFRS S1 and S2, signaling a regional shift toward standardized sustainability reporting. However, challenges remain limited technical capacity, inadequate data systems, and low awareness especially among SMEs hinder adoption.

In Zimbabwe, these challenges are being addressed by the Sustainability Standards Panel (SSP), which is preparing the market for transition. A key initiative is a preparers’ survey to assess readiness and identify knowledge gaps. This informs targeted capacity-building, technical guidance, and stakeholder engagement strategies.

For companies already reporting under TCFD, transitioning to IFRS S2 should be smooth. The alignment between the two frameworks allows businesses to build on existing structures. For newcomers, starting with TCFD-aligned disclosures can serve as a practical entry point to develop internal capacity and data systems.

Audit firms, sustainability consultants, and professional service providers will play a crucial role in this transition. Their expertise will ensure data quality, comparability, and strategic alignment.

As ESG reporting becomes the norm, companies that lead in transparency and accountability will gain a competitive edge.

In conclusion, while both TCFD and IFRS S2 aim to improve climate-related financial disclosures, IFRS S2 introduces a new level of depth, specificity, and accountability.

For Zimbabwean companies, embracing these standards is not just about compliance, it is a strategic move toward resilience, relevance, and long-term value creation in a rapidly evolving global landscape.

DISCLAIMER

The views and opinions expressed in this article are those of the author, Engineer Natalie Musvaire, a Sustainability Manager at BDO Zimbabwe and do not necessarily reflect the official policy or position of the BDO Zimbabwe. This article is intended for informational purposes only and should not be construed as legal, tax, or financial advice. Readers are encouraged to consult with qualified professionals for advice specific to their individual circumstances.

Natalie Chido Musvaire is a Sustainability Manager at BDO Zimbabwe and can be contacted on +263772331150