For decades, a company’s annual report revolved around one question: How much did it earn? But that question is no longer enough. Investors today also want to know how a company manages climate risks, how it manages its resources, and who oversees its decisions. This is where what’s known as “sustainability disclosure” comes in—a field in which Saudi companies have recently made notable progress.

What happened?

A recent study by the International Federation of Accountants (IFAC) found that Saudi companies led the economies covered by the study in the growth of sustainability disclosures. The study covered 22 economies, including G20 countries.

The federation conducted the study in collaboration with the American Institute of Certified Public Accountants (AICPA) and the Chartered Institute of Management Accountants (CIMA). It covered around 1,400 major companies across these economies. According to the findings, the share of companies in the Saudi sample disclosing sustainability information rose from 52% to 98% in 2024, an increase of 46 percentage points. Meanwhile, 84% of Saudi companies included this information in their annual or integrated reports, linking financial performance with sustainability performance.

What is sustainability disclosure?

It is the publication by a company of non-financial information about risks and opportunities related to climate, the environment and natural resources, as well as social and governance matters and their potential financial and operational impacts.

For example, a company that relies on water in its production may face future risks from resource scarcity or rising costs—something that current profits alone do not reveal. This information helps investors and lenders assess a company’s ability to manage risks and create value over the long term.

What are IFRS S1 and IFRS S2?

They are the international standards for sustainability disclosure, issued by the International Sustainability Standards Board (ISSB), which is part of the IFRS Foundation. The first sets out general requirements for disclosing sustainability-related financial information, while the second addresses climate-related disclosures.

The Saudi Organization for Chartered and Professional Accountants (SOCPA) translated the two standards into Arabic under an official licensing agreement with the IFRS Foundation. The organization received international recognition for this work: the Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR), part of the United Nations Conference on Trade and Development (UNCTAD), awarded it the ISAR Honours 2025 in recognition of its contribution to making these standards available in Arabic.

Who verifies this information?

Information alone is not enough without someone to verify it. Companies may exaggerate their environmental commitments in what is known as “greenwashing.” That is why “sustainability assurance” has emerged: an independent review of this information, similar to an audit of financial statements.

In this context, SOCPA adopted International Standard on Sustainability Assurance 5000, issued by the International Auditing and Assurance Standards Board (IAASB). It sets out the general requirements for conducting this type of review, regardless of the disclosure framework used. SOCPA also adopted the ethical and professional conduct requirements for sustainability assurance, including independence standards, to reduce the risk of conflicts of interest.

Why does this progress matter?

Because reliable, comparable information builds trust in companies, supports the efficiency of financial markets and makes the investment environment more attractive—all in line with the goals of Saudi Vision 2030.

This progress builds on earlier efforts to adopt international standards for financial reporting, auditing, quality management and professional conduct. The International Federation of Accountants previously noted that Saudi Arabia was the only country in the Middle East—and one of a limited number of countries worldwide—to meet the requirements for adopting the full suite of international professional standards.

Missing information may conceal a risk that becomes apparent only when a crisis hits, while unreliable information may mislead more than it helps.

So perhaps the best definition of sustainability disclosure is not that it is an additional report companies publish to improve their image.

A more accurate view is that it is a new language companies use to communicate with investors, explaining how they manage risks that do not appear in profit statements: a changing climate, potentially scarce resources and governance that shapes the quality of decision-making.

That is why the rise in the share of Saudi companies disclosing sustainability information—from 52% to 98%—is a figure worth examining from an economic perspective. It is not simply an achievement in the number of reports, nor sufficient proof of the quality of everything they contain. Rather, it offers a window onto a broader shift:
from asking, “How much did the company earn this year?” to asking, “Can it demonstrate that it is able to endure?”

Disclaimer: This article is intended to inform, explaining the news in a clear and accessible way. The information is based on published news sources and has been adapted and simplified; it does not represent an official position or statement by any organization. This information may be updated after publication, so readers are advised to consult official sources for full details.