Corporate Sustainability Reporting
There is a rapid transformation in the concept of corporate disclosure worldwide, whereby financial reporting alone is no longer adequate to measure the performance of business entities or assess their ability to continue operations and achieve growth.
Sustainability, encompassing environmental, social, and governance dimensions, has become an essential requirement for investors, regulators, financiers, customers, and other stakeholders.
A growing number of countries and regulatory bodies worldwide are moving toward making annual ESG sustainability reporting a mandatory requirement for business entities, with a particular focus on listed companies, financial institutions, and organizations of significant economic or environmental scale.
This regulatory evolution is driven by the need to enhance corporate transparency, encourage the integration of sustainability into business strategies and operations, and establish measurable, consistent, and comparable standards for assessing environmental, social, and governance performance.
Accordingly, sustainability reporting is no longer merely a voluntary practice or a public relations tool. Rather, it has become a practical framework that enables business entities to demonstrate their commitment to sound governance, risk management, environmental protection, social responsibility, and the creation of sustainable value.
Read more about: IFRS S1 & S2 Mandatory Sustainability Disclosures in Financial Statements
The Global Body Sponsoring Sustainability Reporting
There is no single global body that exclusively regulates sustainability reporting. However, certain international organizations and standards have become key references in this field.
These include the Global Reporting Initiative (GRI), which is one of the leading international bodies in sustainability reporting. GRI provides standards that help organizations disclose their economic, environmental, and social impacts in a structured, reliable, and comparable manner.
In addition, there are other frameworks and methodologies that support sustainability reporting, such as climate-related disclosure recommendations, sector-specific disclosure standards, and the United Nations Sustainable Development Goals, which many organizations use as a reference for identifying sustainability priorities and measuring performance.
Are There Regulations in the State of Kuwait Requiring Business Entities to Issue Sustainability Reports?
In the State of Kuwait, regulatory and corporate attention to sustainability reporting has clearly evolved, particularly in the capital markets sector.
The Capital Markets Authority issued a circular to companies listed on the Premier Market regarding the disclosure of sustainability reports, as part of its efforts to enhance transparency and develop disclosure practices in line with international best practices.
Boursa Kuwait has also issued a Sustainability Reporting Guide, which aims to assist listed companies in identifying environmental, social, and governance disclosure indicators and improving the quality of information provided to investors and stakeholders.
This reflects the transition of sustainability reporting in Kuwait from a voluntary practice to an increasingly important regulatory requirement, particularly for companies listed on the Premier Market.
In addition, sustainability reporting in Kuwait is linked to broader frameworks, including governance, risk management, social responsibility, environmental protection, and the New Kuwait Vision 2035. This makes sustainability reporting an important tool for supporting sustainable development and enhancing the competitiveness of the Kuwaiti market.
Which Companies in the State of Kuwait Are Required to Prepare Sustainability Reports in Accordance with the Requirements of the Capital Markets Authority?
In accordance with the requirements of the Capital Markets Authority in the State of Kuwait, the companies required to prepare and disclose sustainability reports are all companies listed on the Premier Market of Boursa Kuwait.
The Capital Markets Authority clarified in Circular No. 04 of 2025 that disclosure of sustainability reports will become mandatory for these companies starting in 2026.
This is based on Article (1-17-4) of Module Twelve, “Listing Rules”, of the Executive Bylaws of Law No. 7 of 2010, which provides that the Exchange, pursuant to instructions issued by the Authority, shall require companies listed in one of the markets classified under Article (1-8) to disclose sustainability reports, with the Boursa Kuwait Rules specifying the disclosure requirements.
What International Sustainability Reporting Frameworks and Standards Does the Capital Markets Authority Recommend as Guidance?
The Capital Markets Authority in the State of Kuwait, through the Environmental, Social, and Governance Reporting Guide issued by Boursa Kuwait, has emphasized the importance of using international standards and methodologies as guidance when preparing sustainability reports. This helps companies improve the quality of disclosure and align their reports with the expectations of investors, regulators, and stakeholders.
The key methodologies and standards that may be used as guidance in preparing sustainability reports include:
- Global Reporting Initiative Standards (GRI)
- Sustainability Accounting Standards Board Standards (SASB)
- Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)
- United Nations Global Compact (UNGC)
- Carbon Disclosure Project (CDP)
- International Integrated Reporting Framework (IR Framework)
- International Sustainability Standards Board Standards, namely IFRS Sustainability Disclosure Standards (ISSB)
What Benefits Do Business Entities Gain from Issuing Annual Sustainability Reports?
Issuing annual sustainability reports helps business entities enhance transparency and build trust with investors, customers, regulators, and the wider community. It also enables the Board of Directors and senior management to gain a better understanding of sustainability-related risks and opportunities, such as climate risks, energy consumption, supply chains, health and safety, diversity, and governance.
Sustainability reports also contribute to improving access to finance, as financial institutions and investors are placing increasing emphasis on environmental, social, and governance performance when making investment or financing decisions. These reports also help improve corporate reputation, enhance competitiveness, and demonstrate the business entity’s commitment to social responsibility and sustainable development.
Internally, sustainability reports provide a database that supports performance measurement, gap identification, the setting of trackable targets, and the alignment of sustainability initiatives with the business entity’s strategy.
Steps Business Entities Should Follow to Prepare Annual Sustainability Reports
To prepare an effective and well-structured sustainability report, business entities should follow a clear methodology that ensures the quality of disclosure and its alignment with regulatory requirements and international best practices. The key steps include the following:
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Identifying the Appropriate Framework or Standard
The business entity begins by identifying the framework or standard to be used as the basis for preparing the sustainability report, taking into account the nature of its activities, the size of the organization, regulatory requirements, and stakeholder information needs.
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Identifying Material Topics
Material topics are identified through an assessment of sustainability-related impacts, risks, and opportunities, including the environmental, social, and governance aspects most relevant to the business entity’s activities.
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Identifying Stakeholders and Their Information Needs
Key stakeholders should be identified, such as investors, regulators, customers, employees, financiers, and the community, along with an understanding of the types of information they expect to be disclosed in the sustainability report.
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Collecting Sustainability Data and Key Indicators
This step includes collecting data related to environmental, social, and governance indicators, such as energy and water consumption, emissions, human resources, health and safety, governance, compliance, and ethical practices.
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Reviewing Data Quality and Verifying Accuracy
The business entity reviews the data collected to ensure its completeness, accuracy, and consistency, and links it to existing objectives, policies, and initiatives, thereby enhancing the reliability and assurance-readiness of the report.
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Preparing the Report Using a Clear and Structured Format
The sustainability report is prepared in a professional manner, covering the methodology used, the reporting scope, key indicators, annual performance, implemented initiatives, and future improvement plans.
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Approving and Releasing the Report
The report should be submitted to the relevant management function and to the Board of Directors or the concerned committee for approval, after which it should be released and published to stakeholders in accordance with regulatory requirements and approved disclosure mechanisms.
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Enhancing the Reporting Cycle for the Following Year
After publication of the report, the business entity should evaluate the reporting process, identify opportunities for improvement, and enhance data quality and internal governance for the next reporting cycle.
Conclusion
Sustainability reporting has become an integral part of the modern corporate governance and disclosure ecosystem. In light of global and local regulatory developments, business entities in the State of Kuwait need to approach sustainability reporting as a strategic tool for risk management, transparency enhancement, performance improvement, and strengthening trust with investors and stakeholders.
Adopting a clear framework for sustainability reporting not only supports compliance with regulatory requirements but also contributes to building an organization that is better positioned for sustainable growth and competitiveness in a rapidly changing business environment.