INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue XI November 2025

Remodelling the Integration Principles of International Financial

Reporting Standards (IFRSS) Reporting Requirements with

Environmental, Social Governance (ESG) Sustainability Reporting

Zivanai Mazhambe

Post Doctoral Sustainability Research Bright Africa Consultancy Training

DOI: https://dx.doi.org/10.47772/IJRISS.2025.91100101

Received: 13 November 2025; Accepted: 21 November 2025; Published: 01 December 2025

ABSTRACT

The International Financial Reporting Standards (IFRS) Foundation has traditionally shaped financial reporting

through its frameworks and accounting standards, mainly focussed on the investors and capital providers. with

an overall goal to maximize wealth and returns. The traditional accounting models have been marred by short

termism returns at the detriment of financial sustainability and returns, that mitigate other key stakeholders,

Other key capital formations including the planet (environmental capital), people (human capital) and profits

(economic capital) which sustainability reporting considers in addition to the investors required rate of return.

The IFRS foundation in mitigation of these growing sustainability upheavals, has formed International

Sustainability Standard Board (ISSB) framework, which is dubbed as IFRS Sustainability, and to date has issued

two (2) standards, namely the IFRS S1 (general related financial sustainability) and IFRS S2 (general related

Climate sustainability) whose effected adoption was January 2024. Whilst these ISSB framework interventions

are fast gathering momentum and adoption across numerous international jurisdictions, their key goals are more

focussed on financial materiality at detriment of impact materiality, whose hallmark is the Environmental, Social

and Governance (ESG) Reporting. This study seeks to remodel traditional financial reporting principles to embed

sustainability reporting and impacts. An empirical study was adopted focussed on Pan African Federation

Accountants (PAFA) across all the African jurisdictions. The findings revealed that IFRS is rooted in decision

useful information relevant to investors and capital providers, at the expense of other key stakeholders including,

communities, employees, regulators and those across the supply chain. Furthermore, sustainability reporting

conceptually does not apply the accrual concept, which makes integrated reporting technically challenging. The

IFRS S2 is climate centric, through the environmental pillar, at the expense of the other environmental issues

and the social pillar of the ESG Framework. The study recommends the further evaluation of the ISSB

Framework consolidated reporting with traditional financial reporting.

Keywords: ESG, ESG Reporting, Sustainability, Sustainability Reporting, PAFA, IFRS S1 /IFRS S2, ISSB,

Sustainability Strategy

INTRODUCTION

The International Accounting Standards Board (IASB) financial reporting standards is the financial reporting

pinnacle basis for numerous geographical dispersions, mainly through International Financial Reporting

Standards (IFRS) and International Accounting Standards (IAS). These standards have been widely accepted

and evolved with the investor and capital providers as being the overriding primary users and beneficiary of their

financial reports. This reporting objectivity underpinning has been largely promulgated through the IASB

Conceptual Framework. The investor’s profit and wealth maximisation objectives and the subsequent returns

have compromised other forms of capital and mainly the environmental capital, which has culminated into

negative effects and raw material availability. The Environmental, Social and Governance (ESG) international

stewardship growing concerns and negative discontentment across the globe, are strongly exerting a heavy

pressure on the accounting standard setters to consider ESG accounting and reporting principles, as integral non-

financial reporting disclosures. These International growing ESG conscious investors considerations and

requirements, are pushing for mandatory ESG and sustainability integration disclosures, therefore culminating

into potential remodelling of IFRS Foundation’s reporting requirements.

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INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue XI November 2025

LITERATURE REVIEW

Global climate change, resource depletion and carbon transition challenges

Environmental, Social and Governance (ESG) is a set of criteria that impact a company’s investment making

process and operations in a manner that assesses the environmental impacts through climate change or

sustainability; social considerations through community stakeholder investments and governance considerations

through transparency, accountability and compliance in company operations (Basel, 2021). Notable human and

natural ecosystems have been subjected to the negative effects of these climate change and human health risks

across many geographical regions (Basel, 2021). Developing countries appear to be affected by climate change

through their economic growth, with empirical evidence suggesting the increase of 117 basis points on the cost

of debt, and an increase in socioeconomic challenges thereby further harnessing climate physical and transitional

risks (Basel, 2021)

It is estimated that combined human activities have significantly contributed to global warming to about 1.0

degrees Celsius, with a further projection to reach 1.5 degrees Celsius of global warming above between 2030

to 2052 above the pre-industrial levels. (IPCC, 2025), The European Union (EU) envisages that the current

unprecedented level of climate change, carbon transition and resource depletion has stampeded countries in all

geographical jurisdictions to adopt the Paris Agreement (2015) and the UN 2030 Agenda. The EU in its

commitment to sustainable financing through transitioning to greener lower carbon circular economy has

committed at least more than 20% of its budget toward climate related considerations through sustainable

investments and projects.

Sustainable Corporate Value creation

Sustainable corporate value creation and maintenance is a by-product of cohesive ESG Reporting performance

in integrated thinking, decision making and accompanying resolute actions over the short-, medium- and long-

term company interventions that enhance stewardship and accountability through utility of broad base of capitals

(financial, intellectual, manufactured, human, social and relationship and natural) interdependences (IIRC,

2013). The broad base of capital formations comprising of financial (debt, equity, derivatives), intellectual

(knowledge systems, patents, trademarks, copyrights), manufactured (business assets produced or purchased for

sale, production systems), human (talents, skills, experience), social and relationship (staff, management,

community, business suppliers, customers, regulators) and natural (environmental capital, raw materials)

IFRSs are pivotal in checks and balances in financial information presented fairly, to aid capital funders and

provider’s objective decision making through general purpose financial statements, underpinned by the

published standards Karpeo (2024). The IFRS Conceptual framework provide additional guidance and clarity

on a variety of technical and non-technical guidance for the benefit of investors, creditors and lenders in

providing information and decision useful information, which is required for comparability.

Integrated Reporting

The core integrated reporting guiding principles include: future orientation and strategic focus (creation of value

and capital base maintenance), materiality (significant principles that impacts strategy and value creation),

stakeholder relationships (social stakeholder aspects), risks and opportunities (real and potential risks and

opportunities impacting short, medium and long term) and data connectivity (value creation dependencies)

which underpin the preparation of integrated reports

International Financial Reporting Standards on Sustainability

The international Sustainability Standards Board (ISSB) was formed to promulgate a sustainability framework

that advances the information needs of the investors in the capital markets, and to date has issued the

sustainability standards namely, IFRS 1 (general financial related information) and IFRS S2 (climate related

information) (IFRS, 2023)

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INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue XI November 2025

IFRS Foundation through the promulgation of IFRS S1 and IFRS S2, has envisaged disclosure of sustainability

and climate related risks and opportunities (IFRS Sustainability, 2023). These standards are earmarked to be the

global baseline for reporting of sustainability and climate disclosures, incorporating other sustainability

frameworks like the Task Force on Climate related Financial Disclosures (TCFD), Climate Disclosure Standards

Board (CDSB), and International Integrated Reporting Council (IIRC). The IFRS S1 and IFRS S2 reporting

disclosures are effective January 2024, for investors decision usefulness in the provision of entity resources.

Research Objective

To remodel the integration principles of International Financial Reporting Standards (IFRSs) reporting

requirements with Environmental, Social Governance (ESG) sustainability reporting.

Research Question

Evaluate the integration principles of International Financial Reporting Standards (IFRSs) reporting

requirements with Environmental, Social Governance (ESG) sustainability reporting

METHODOLOGY

The study methodology adopted is mixed research methodology (Mazhambe, 2014), through researcher

administered questionnaires and interviews. The case study research design (Mazhambe, 2014) is premised on

the enquiry approach so as to extract deeper meaning and presumably perceived variable correlations on the

study phenomena. Descriptive and inferential statics have been adopted for data analysis, including qualitative

explanatory notes have been employed to extract deeper meaning of the study phenomena (Mazhambe, 2020).

The study population was IFAC Accountants in public sector based in Africa, with the sampling frame of Pan

African Federation Accountants (PAFA) public sector accountants, being selected randomly (Mazhambe,

2020).. The accountants jurisdictions adopted in this study were southern Africa, East Africa, Central Africa,

West Africa and North Africa (Mazhambe, 2020).

DATA ANALYSIS, PRESENTATION AND DISCUSSION

Southern Africa

Mean

East Africa

Central Africa

0.2

Mean

0.2

Mean

0.2

Standard Error

Median

0.064265076 Standard Error

0.076419893 Standard Error

0.063087241

0.21

0.2

Median

Mode

0.15

Median

Mode

#N/A

Standard Deviation 0.143701079 Standard Deviation 0.170880075 Standard Deviation 0.14106736

Sample Variance

Kurtosis

0.02065

Sample Variance

0.0292

Sample Variance

0.0199

-0.889153363 Kurtosis

0.409445586 Skewness

1.180486489 Kurtosis

1.149869147 Skewness

-0.086437211

0.368689471

0.37

Skewness

Range

0.36

0.04

0.4

Range

0.44

0.03

0.47

Range

Minimum

Maximum

Minimum

Maximum

Minimum

Maximum

0.03

0.4

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INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue XI November 2025

Sum

Count

Table 1: Primary data: Southern Africa, East Africa, Central Africa

West Africa

Mean

North Africa

Mean

0.2

Standard Error

Median

0.081055537

0.14

Standard Error

Median

0.077910205

0.13

Mode

#N/A

Mode

#N/A

Standard Deviation

Sample Variance

Kurtosis

0.18124569

0.03285

0.54826491

1.043849944

0.46

Standard Deviation

Sample Variance

Kurtosis

0.174212514

0.03035

0.113605954

0.817517313

0.45

Skewness

Range

Skewness

Range

Minimum

Maximum

Sum

0.02

Minimum

Maximum

Sum

0.01

0.48

0.46

Count

Table 2: Primary data West Africa, North Africa

ANOVA

Groups

Count

Sum

Average

0.2

Variance

Southern Africa

East Africa

0.02065

0.0292

0.2

Central Africa

West Africa

0.2

0.0199

0.2

0.03285

0.03035

North Africa

Table 3: ANOVA

ANOVA

0.2

Source of Variation

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INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue XI November 2025

Between Groups

Within Groups

-1.11022E-16

0.5318

-2.77556E-17

0.02659

-1.04384E-15

Total

0.5318

Table 4: ANOVA variance analysis

As evidenced form the above statistics whose data is statistically significant and in correlation, the mean, median

values are relatively coherent, with acceptable insignificant standard errors, extracted from the primary data

premised on the research question on respondents from different jurisdictions of Southern Africa, the data has

internal and external validity, and free from bias. The ANOVA statistics is also in congruent with linearity, as

evidenced from the critical values within and between the group sets above. The data range depicted is clearly

and effectively spread and is representative of the sample population. There is therefore a notable significant

correlation and consistency for statistical significance to derive inferential conclusions.

The findings from the respondents as depicted above were statistically significant and the qualitative content

analysis also virtually concurred, that recognition and measurement of government assets and their accounting

is technically challenging and difficult. The majority of respondents reiterated that the numerous measurement

basis for financial statements were not prescriptive and hence relying on professional judgement of the preparer

depending on the market conditions. There is no clearly defined correlation of specific assets and measurement

basis, hence being subjective in nature. The subjectivity of asset measurement especially with regard to

intangible assets is open to user manipulation.

As evidenced form the above statistics whose data is statistically significant, extracted from the primary data

premised on the research question on respondents from different jurisdictions of Southern Africa, East Africa,

Central Africa, West Africa and North Africa, the data has internal and external validity, and free from bias.

The mean, median values are relatively coherent, with acceptable insignificant standard errors. The ANOVA

statistics is also in congruent, as evidenced from the critical values above. The data range depicted is clearly

spread and is representative of the sample population. There is therefore a notable significant correlation and

consistency for statistical significance to derive inferential conclusions.

The findings from the respondents as depicted above were statistically significant and the qualitative content

analysis also virtually concurred, that the assessment of the PAFA Professionals regarding the creation of a new

sustainability reporting model. The majority of respondents concurred that traditional financial reporting using

only the IFRS and IAS reporting standards is fast becoming technically obsolete and of limited decision

usefulness to the investors

Proposed Esg Integration Sustainable Business Model & Ecosystems

The existing traditional business model and International financial Reporting Standards (IFRS) should be

remodelled. The traditional business and financial model under the IFRS reporting framework is underpinned

by the profit making overall, is proving to be technically obsolete and of limited decision usefulness to investors

through the capital markets. The study is therefore recommending the adoption of a new ESG sustainability

business model and ecosystem integration, based on the existing ESG and sustainability Frameworks and

Standards. The proposed ESG and sustainability model is as depicted below:

Environmental, Governance and Social (ESG) Material Risks

Environmental risks mainly manifest in the form of water management, energy management, natural resources

management, ecology & diversity management. Social risks presumptively manifests in human capital

management, human rights, labour issues, community engagement and development. The Governance risks

interplays in the forms of transparency and disclosure of shareholder rights, executive & management

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INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

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compensation, board independence and duties. The evaluation of materiality is hinged on the impact and severity

of ESG risks

ESG Opportunities

The ESG opportunities arise from the transition risks as innovation begins to manifest in business operations.

As operations migrate to a lower carbon effect through innovation, a wide range of opportunities will be

unfolding

CONCLUSIONS

The IFRS Foundation through the ISSB Framework and standards, though earmarked to be a global baseline

standard, is limited is scope through its financial materiality overriding objective. The IFRS S1 and IFRS S2 are

investor centric, and meeting the information needs of capital providers, who are characterised by short term

returns, are not necessarily in sync with ESG and Sustainability principles, which places emphasis on long term

value creation. Furthermore, the ISSB framework does not fully subscribe to all the ESG pillars, especially the

social pillar encompassing human capital and the society, who appear not to be its primary stakeholder focus.

The IFRS conceptual framework is underpinned by the International Accounting Standards Board (IASB),

whose primary focus are the capital providers is primarily based on the accrual concept, as opposed to the

concept of sustainability which requires forward looking information. The ISSB standards should therefore be

remodelled and rebased on the ESG Framework, with sustainability embedded in the environmental pillar. There

are disparities in the standardisation of the data management which then culminates in technical challenges in

standardisation and comparisons.

ACKNOWLEDGMENTS

Sincere acknowledgement is extended to Favoured Africa Business Research Institute (Botswana) for assistance

in the coordination of primary data to stakeholders

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INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue XI November 2025

REFERENCES

1. IASB (2010): Conceptual Framework 2010

2. Basel Committee on Banking Supervision (Basel, 2021). Climate-related risk drivers and their

transmission channels. Bank for International Settlements 2021

3. European Union (EU, 2018): Action Plan: Financing Sustainable Growth.

4. IFRS (2023) : Sustainability Disclosure Standards 2023

5. Intergovernmental Panel on Climate Change (IPCC)IPCC (2025): Global warming of 1.3 degrees

Celsius.

6. Karpeo (2024): The importance of IFRS. WHY ARE IFRS IMPORTANT?. Sarah est associée chez

Karpeo

7. Mazhambe, Z (2014): Book – The compromise of IASB’s Conceptual Framework and IFRSs, Lambert

Academic Publishing, ISBN: 978-3-659-57452-8

8. Mazhambe, Z (2014b): Book -Doctoral (PhD) Proposal Writing, CompletelyNovel, ISBN- 13: 978-

1849145909, ISBN-10: 1849145903

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