In June 2023 the International Sustainability Standards Board issued its first two standards. IFRS S1 sets the general rules for disclosing sustainability-related financial information. IFRS S2 applies those rules to climate. Since then, regulators around the world have decided how and when their markets will adopt them.
Oman has made its decision. Through Decision E/7/2026, the Financial Services Authority adopted both standards for listed public joint stock companies and financial institutions. Full application of IFRS S1 and S2 starts on 1 January 2029, and disclosure of Scope 3 greenhouse gas emissions becomes mandatory a year later, on 1 January 2030. The authority has said that the period before 2029 is for preparation: governance, data and internal controls.
Two years sounds generous. For a board, it is about eight quarterly meetings. That is not many when the work involves new data systems, new controls and new skills at the top of the company.
What the standards ask companies to disclose
IFRS S1 asks a company to disclose the sustainability-related risks and opportunities that could reasonably affect its cash flows, its access to finance or its cost of capital over the short, medium and long term. The test is financial. A company reports what matters to investors and lenders, rather than every environmental or social activity it undertakes.
Both standards organize disclosure around four areas that boards will recognize from earlier climate reporting frameworks:
- Governance: who in the company oversees these risks and opportunities, and how the board stays informed.
- Strategy: how the risks and opportunities affect the business model, the strategy and the financial position.
- Risk management: how the company identifies, assesses and monitors them.
- Metrics and targets: how it measures performance and what it has committed to achieve.
IFRS S2 adds specific climate requirements. Companies describe their physical risks, such as heat and water stress, and their transition risks, such as shifts in regulation, technology and customer demand. They assess the resilience of their strategy under different climate scenarios, and they report greenhouse gas emissions across Scope 1, Scope 2 and Scope 3. The disclosures sit alongside the financial statements and cover the same reporting period.
Why this lands on the board's agenda
The governance pillar names the board directly. Investors will read who oversees climate risk, how often directors discuss it and what skills they bring to that discussion. A company cannot outsource that answer to its sustainability team.
The link to the financial statements also changes the level of rigor. Sustainability figures that appear next to audited accounts need the same discipline: documented processes, clear ownership, controls that an assurance provider can test. Directors who chair audit committees will recognize the pattern, and they will want comfort that the numbers hold up.
For Gulf companies the strategy question carries particular weight. Many groups in the region operate in energy, logistics, real estate and heavy industry, sectors where the transition to a lower-carbon economy shapes long-term value. A board that understands those dynamics can treat disclosure as a strategic exercise and spot opportunities its competitors miss.
Seven questions for the next board meeting
Directors do not need to become sustainability specialists. They need to ask management the right questions and judge the quality of the answers.
- Who owns this? Which committee oversees sustainability disclosure, and which executive is accountable for delivery?
- What is material for us? Has management identified the sustainability risks and opportunities that could affect our cash flows and cost of capital, and how did it decide?
- Where is the data? Do we have reliable emissions and climate data today, or will we depend on estimates and suppliers?
- How ready are we for Scope 3? Our value chain emissions depend on suppliers and customers. What will it take to measure them by 2030?
- Which controls apply? Will sustainability data go through the same internal control discipline as financial data?
- What do the scenarios tell us? Has the strategy been tested under different climate pathways, and what changes if one of them comes true?
- Does the board have the skills? Do directors understand climate risk well enough to challenge management, or do we need training or new expertise?
The skills boards will need
Most Gulf boards include directors with strong backgrounds in finance, law and their own industry. Fewer include someone who has worked closely with climate risk, emissions accounting or sustainable finance. The new standards make that gap visible, because the governance disclosures describe how the board oversees these topics and what competence it brings to them.
Boards have three ways to close the gap. They can train existing directors, so that every member understands the basics of climate risk and the structure of IFRS S1 and S2. They can give one committee, often audit or risk, deeper responsibility and make sure its members receive more detailed preparation. And when a seat opens, the nominations committee can list sustainability expertise among the skills it seeks.
Executives below the board need the same literacy. The chief financial officer, the head of risk and the heads of major business units will produce the disclosures and defend them. If they treat sustainability as a side report owned by a small team, the numbers will lack the discipline investors expect. If they treat it as part of financial management, the disclosures will hold together under scrutiny.
A practical path to 2029
The Financial Services Authority has published a phased implementation policy for consultation, and companies should follow its final form closely. Within that framework, many boards will find a simple year-by-year plan useful:
- 2026: assign board and executive ownership, run a gap analysis against IFRS S1 and S2, and agree which topics are material.
- 2027: build the data systems and controls, start collecting emissions data, and run a first climate scenario analysis.
- 2028: produce a full dry-run report, invite an external review, and fix the weaknesses it reveals.
- 2029: publish the first compliant disclosures, then extend Scope 3 coverage for 2030.
The companies that start early will reach 2029 with a tested process. Those that wait may find themselves rushing a complex exercise into a few months, with the board signing disclosures it has not had time to understand.
Disclosure as a source of advantage
Good disclosure does more than satisfy a regulator. It shows investors that management understands the forces shaping the business, and it can widen access to green and sustainability-linked finance. Inside the company, it forces sharper conversations about where capital goes and which risks the business is willing to carry.
Boards that treat IFRS S1 and S2 as a leadership topic will set the tone for everything below them. The National Academy of Leadership and Innovation built its ESG and Sustainable Finance Fellowship for executives and directors who want to lead that work, from disclosure and climate risk to green finance.
