Sri Lanka Embraces Global Sustainability Standards

Strategic Insights -

Sri Lanka has made a significant commitment to global sustainability by joining the International Sustainability Standards Board (ISSB) and adopting its standards, becoming one of the first jurisdictions in the world and South Asia to do so. This move is aimed at improving transparency and comparability in sustainability reporting, enabling investors to make informed decisions. The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) will implement the ISSB Standards, strengthening Sri Lanka's regulatory framework and supporting national efforts towards sustainable economic growth.

Key Takeaways:

  • Sri Lanka is among the first 17 jurisdictions globally to join the ISSB and adopt its sustainability standards, demonstrating a commitment to strengthening sustainability-related disclosures and fostering market transparency.
  • The ISSB Standards are developed by the International Sustainability Standards Board (ISSB) under the IFRS Foundation, which aims to establish a global baseline for sustainability disclosures.
  • The standards are implemented by the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka), which is the sole authority for setting accounting and auditing standards in the country.
  • The adoption of the ISSB Standards will require listed entities on the Colombo Stock Exchange (CSE) to report on their environmental, social, and governance (ESG) impacts in a transparent and comparable manner.
  • By 2025, the first 100 listed entities on the Main Board of the CSE are expected to mandatorily comply with the new sustainability standards.
  • By 2028, all companies preparing their accounts based on the Sri Lanka Accounting Standards with an annual turnover exceeding Rs.10 billion will need to comply with the standards.
  • The Empower Board-listed entities as of January 1, 2024, and all other Specified Business Enterprises will also be required to adopt the standards by 2030.

Statistics:

  • 17 jurisdictions globally, including Sri Lanka, have formally committed to fully adopting the ISSB Standards (IFRS Foundation, 2024).
  • By 2025, 100 listed entities on the Main Board of the CSE will mandatorily comply with the new sustainability standards.
  • By 2026, this requirement will extend to all listed entities on the Main Board of the CSE.
  • By 2028, all companies preparing their accounts based on the Sri Lanka Accounting Standards with an annual turnover exceeding Rs.10 billion will need to comply with the standards.
  • Rs.10 billion: the annual turnover threshold for companies that must comply with the standards by 2028.

Sources:

  • IFRS Foundation (2024) - Initial set of 17 jurisdictional profiles.
  • IFRS Foundation (2024) - IFRS S1 and S2 or SLFRS S1 and S2 in the Sri Lankan context.
  • Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) - Press release on adoption of ISSB Standards.