ADDIS ABABA -- The Accounting and Auditing Board of Ethiopia (AABE) announced that the country is set to implement the International Financial Reporting Standards (IFRS) S1 and S2, which focus on sustainability, climate-related disclosures, and governance.
This move aims to enhance Ethiopia's appeal to foreign investors and strengthen confidence in its financial reporting systems.
According to AABE Deputy Director General Tsewaye Muluneh, the adoption of IFRS S1 and S2 marks a significant step in aligning Ethiopia's financial reporting with global best practices. "The standards will not only improve financial transparency but also ensure that institutions consider environmental sustainability creating a more attractive environment for investors," she told The Ethiopian Herald.
The IFRS S1 and S2 standards,issued by the International Sustainability Standards Board (ISSB), aim to provide consistent, comparable, and reliable sustainability-related disclosures. They are particularly focused on climate-related risks and opportunities, which are increasingly important to global investors.
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Tsewaye emphasized that Ethiopia's financial institutions ,particularly banks, insurance companies, and major state-owned enterprise, are preparing to implement these standards. "By integrating sustainability disclosures into their financial reporting, these institutions will be better positioned to attract foreign direct investment and build trust in capital markets," she added.
As part of the reform, Ethiopia's broader financial sector is undergoing transformation, with the development of a capital market and regulatory enhancements. The implementation of IFRS S1 and S2 will support this reform by promoting greater transparency and environmental responsibility.
"These standards go beyond financial metrics. They represent a shift toward responsible, sustainable investment practices that take into account climate-related risks. Investors today are not only looking for credible financial reports but also want assurance that their investments are aligned with sustainable development," Tsewaye noted.
In a symbolic gesture demonstrating commitment to sustainability, members of the Association of External Auditors, the Accounting Society of Ethiopia, and the Accounting and Auditing Professionals Association planted indigenous saplings yesterday at 41 Eyesus area in Addis Ababa. The initiative was carried out under the theme, "IFRS Sustainability Standards for Advancing a Green Ethiopia."
Tsewaye explained that the tree-planting effort reflects the profession's social responsibility. "Environmental restoration,particularly through planting indigenous species in mountainous and degraded areas,is a vital part of our national sustainability agenda."
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She concluded that AABE will continue to license, regulate, and follow up on accounting and auditing professionals to ensure compliance with the new sustainability standards and contribute to a transparent, green, and investor-friendly financial environment.
