IFRS S1 and S2 Implementation Readiness in Emerging Markets: A Multi-Dimensional Assessment Framework and Market Readiness Index

Purpose: This paper aims to examine IFRS S1 and S2 Sustainability Disclosure Standards awareness and implementation readiness among Public Interest Entities (PIEs).

Design/methodology/approach: A quantitative research approach with a cross-sectional survey of 241 PIEs across 11 sectors was used. Data was collected using a closed-ended structured questionnaire based on the four pillars of IFRS’s sustainability framework: Governance, Strategy, Risk Management, and Metrics and Targets. Data was analysed using different statistical analyses. Descriptive statistics and factor analysis were used to establish the four pillars, with their relative importance determined through the Analytic Hierarchy Process based on expert pairwise comparisons.

Findings: Findings reveal high general awareness of IFRS S1 and S2 standards (82%), although detailed implementation knowledge is lower (55.6%). Readiness assessment across pillars yielded an overall Ghana Sustainability Reporting Market Readiness Index (GSRMRI) score of 46.6% based on the four pillars (governance (48.25%), strategy (49.25%), risk management (46.50%), and metrics & targets (41.00%). Sectoral analysis indicates renewable resources and energy sectors lead in readiness, while technology and communications lag.

Originality: This study contributes three key novel advances: First, it provides a pioneering assessment of IFRS S1 and S2 implementation readiness in emerging markets. Second, it introduces the GSRMRI framework as a standardised methodology adaptable across emerging markets. Third, it offers unique insights through sector-specific analysis of preparedness levels.

Practical implications: The study proposes a phased IFRS S1 and S2 implementation roadmap, starting with voluntary adoption and capacity building before moving to mandatory implementation, while providing practical recommendations for stakeholders to enhance sustainability reporting capabilities.

Social implications: The research contributes to advancing sustainable business practices in emerging markets, potentially improving environmental and social accountability. It supports the development of more robust sustainability reporting frameworks, benefiting stakeholders, including investors, regulators, and the broader society in their decision-making processes.

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