CIPC ESG Integration: iXBRL Transformation in 2023
ESG reporting has gained growing significance among the government, businesses, and consumers within South Africa. Similar to global trends, businesses operating in South Africa are facing escalating demands to showcase their commitment to sustainable practices and minimise their carbon footprint. The recent changes in the global climate have increased the need for the government and corporates to pay more attention to environmental factors when making decisions.
To address this, South Africa proactively encourages ESG reporting and adopting sustainable operational practices. International Sustainability Standards Board (ISSB) is currently working on incorporating ESG reporting for South Africa into the current CIPC taxonomy for the 2023/24 financial period. The following blog discusses CIPC’s approach to introducing ESG reporting in South Africa. Continue reading to find out.
Options for ESG Reporting
There are two possible options to include ESG reporting in South Africa. These options include:
- Developing a separate taxonomy
- Integrating the ESG parts with the current accounting taxonomy as a separate module
After discussions, ISSB chose to adopt ESG reporting in its current accounting taxonomy.
CIPC iXBRL Reporting Roadmap
It’s been five years since CIPC mandated all qualifying entities in South Africa to submit their AFS in iXBRL format. Since then, the CIPC has observed a significant enhancement in its capacity to identify instances of non-compliance. As South Africa prepares itself for ESG reporting, let’s look back at its journey of CIPC iXBRL.
- February 2016: CIPC opted to standardise financial reporting procedures by adopting iXBRL, an internationally recognised digital standard for business and financial data reporting.
- 2017: This year marked the development of the CIPC filing portal and client-side software.
- February 2018: CIPC announced a pilot program for companies to file financial reports in iXBRL format.
- July 2018: On 1st July 2018, CIPC mandated iXBRL in South Africa for all public, private, and state-owned companies and close corporations.
- 2019: CIPC improved data quality to bring it on par with global trends.
- October 2020: This year, IFRS, Company Act, and GRAP 2020 taxonomies were updated.
- 2023: CIPC decided to adopt ESG reporting for public and state-owned companies. The year will include voluntary filing.
Timeline for CIPC ESG Filing in iXBRL Format
The short-term and long-term possibilities for filing ESG reports are as follows:
- Financial Year 2023/24: Voluntary disclosure
- Financial Year 2024/25: Mandatory disclosure (minimum tagging)
- Financial Year 2025/26: Mandatory disclosure (moderate and detailed tagging)
However, the mandatory disclosures are subject to Ministerial Directive/Legislative changes.
Impact on CIPC Taxonomy
With an aim to incorporate ESG reporting into the existing taxonomy, changes were made to the IFRS 2023 taxonomy. A total of 38 elements were added, and 241 elements were deprecated from the IFRS 2023 taxonomy. Furthermore, 630 elements were modified by providing more accurate and updated descriptions in the documentation labels and applicable reference links. The IFRS 2023 taxonomy did not include any changes for SMEs.
According to the Companies Act 2008, preparing financial statements must be consistent with the IFRS. To ensure the compliance of CIPC taxonomy with the Companies Act requirements, CIPC should incorporate all changes introduced in IFRS 2023 taxonomy.
The new IFRS standards were launched at the Johannesburg Stock Exchange (JSE) on 29 June 2023 so that all listed companies could file ESG reports in Q4.
Partner With DataTracks for ESG Reporting!
With ESG reporting new to South Africa, companies can find it challenging to file compliant reports. Solution? Adopt ESG reporting in the voluntary phase so you can get the hang of it till the filing becomes mandatory.
Looking for a partner to help you make a smooth transition? DataTracks can be your best bet! DataTracks is a CIPC-approved software and service provider well-equipped to handle the new ESG reporting mandate. With 18+ years of experience, the experts at the company have prepared over 328,000 compliant reports. Moreover, the team stays abreast of the latest changes in CIPC iXBRL regulations to ensure error-free reporting. For more updates on ESG disclosure reporting, visit the blog @https://www.datatracks.com/za/cipc/blog/. You can get in touch with a DataTracks expert @ +27-10-446-9061 or e-mail email@example.com to ensure CIPC-compliant ESG reports.