Companies listed on the Johannesburg Stock Exchange (JSE) are facing significant challenges in adapting to the evolving landscape of sustainability reporting. The JSE has implemented measures to standardize sustainability reporting, aiming to enhance compliance, credibility, and investor trust. However, ensuring consistent adherence to these regulations remains a complex task for JSE-listed firms.

Prof Neels Kilian, from the North-West University’s Faculty of Law, shed light on the intricacies of this transition during his inaugural lecture titled “The legal background to integrated financial reporting” at the Potchefstroom Campus on March 5, 2025. He emphasized the JSE’s introduction of sustainability metrics in 2022, mandating companies to disclose information on approximately 60 factors related to environmental, social, and governance practices. This framework, influenced by the World Federation of Exchanges model that delineates 30 key indicators, is integrated into the JSE’s reporting requirements, setting it apart from exchanges like the New York Stock Exchange, which treat such guidelines as recommendations.

While companies are in the process of aligning with the new reporting framework, achieving full compliance remains a work in progress. Asset managers such as BlackRock and Old Mutual utilize independent rating agencies to evaluate sustainability performance. Collaboration between the JSE and the London Stock Exchange for the FTSE/JSE Top 30 Index, assessed for sustainability compliance by FTSE Russell, is notable. Nonetheless, Prof Kilian highlighted a lack of publicly available ratings for companies within this index, underscoring the necessity for transparent and reliable data accessibility for investors.

In contrast, exchanges like the Paris Stock Exchange leverage rating systems such as Morningstar and Equitics® to gauge sustainability compliance. Prof Kilian proposed that the JSE might need to adopt similar independent assessment mechanisms to bolster investor confidence. He emphasized that the future of financial reporting is intertwined with sustainability, urging stock exchanges to adapt and enhance compliance and credibility standards to meet the demands of the evolving landscape.

In conclusion, as sustainability reporting continues to shape the corporate reporting landscape, JSE-listed companies are challenged to navigate these new requirements effectively to uphold transparency, accountability, and investor assurance in the market.