Kenyan firms are making progress in recognising climate change as a business issue but are struggling to translate this concern into measurable financial and operational data, exposing a key gap ahead of mandatory sustainability reporting next year.
A 2026 market readiness study by the Institute of Certified Public Accountants of Kenya (ICPAK), based on self-reported and unaudited data from 385 entities, shows many firms face a race against time to build the systems and data needed to quantify climate-related risks.
The gap between intention and ability to measure responses to climate-related risks piles pressure on firms as the clock ticks towards the January 2027 date, by which large firms must comply with International Financial Reporting Standards (IFRS) rulebooks for reporting on how environmental and sustainability issues affect their business.
The two climate-related global reporting standards are IFRS S1 and S2. While IFRS S1 is the general rulebook for all sustainability and Environmental, Social and Governance financial risks, IFRS S2 is focused only on climate change.
IFRS S1 will force companies to start sharing any sustainability-related risk that could change their financial future, while IFRS S2 will require them to provide exact details about how global warming, extreme weather and the shift to green energy will hurt or help their operations.
Kenyan firms classified as public interest entities (PIEs), which include large and high-impact firms such as those listed at the Nairobi Securities Exchange (NSE), will start mandatory disclosure from January 2027, followed by large non-PIEs (January 2028).
However, ICPAK study shows strategic intent from boards of companies towards sustainability reporting is advancing faster than the firms’ ability to produce the detailed disclosures required under the new standards.
The report describes this as a ‘readiness paradox,’ adding that the gap is widest in the sectors with the least regulatory pressure.