With global ESG and sustainability commitments, Qatar is deepening its alignment from voluntary to mandatory Environmental, Social, and Governance (ESG) reporting. It is worth noting that this is being spurred on by regulatory bodies such as the Qatar Financial Centre Regulatory Authority (QCRA), Qatar Stock Exchange (QSE), and the Qatar Central Bank (QCB) which have mandated that sustainability disclosures will be deemed mandatory starting from Q1 2026.
With this directive, the rules are structured in line with the International IFRS S1 and S2 standards which require listed companies to provide audited, transparent and consistent ESG data built around Qatar’s National Vision 2030. To provide companies with easy and credible alignment, this article will provide an overview of IFRS S1 and S2 for QSE and QCB listed companies and key compliance requirements.
Overview of the IFRS S1 and S2
It is worth noting that the objective of the IFRS standard is to disclose all crucial information regarding sustainability-related risks and opportunities that could reasonably be expected to impact a company’s prospects in Qatar. IFRS S1 focuses on the basic requirements for sustainability disclosures and relates to:
- Requires disclosure of material information about sustainability-related risks and opportunities with the financial statements, targeted at meeting investor needs.
- Refers to sources to help companies identify sustainability-related risks and opportunities and information
- Requires industry specific disclosures and relates to the industry-based SASB standards for guidance when identifying disclosures relating to sustainability-related risks or opportunities
- Requires disclosures that enable investors to understand the link between the sustainability-related risks and opportunities and the sustainability-related financial disclosure and financial statements
In terms of applicability, both standards are designed to be complementary. However, IFRS S2 have been structured to capture climate-specific requirements including:
- Strategy disclosures that distinguish between physical and transitional risks
- Disclosure of their plans to respond to climate-related risks and opportunities, including how climate-related targets are set and consideration of additional targets for meeting key compliance laws or regulations
- Companies should perform scenario analysis to explain how various climate-related activities may impact the Qatari business in the future
- Climate-related metrics and target disclosures which include cross industry metrics, industry-based metrics and company-specific metrics.
Qatar’s Mandatory ESG Reporting
Qatar’s acceleration towards a sustainability driven economy is one of the most laudable in the GCC with Ken Research showing that the country had an estimated $1.3 billion ESG focused investment fund. A major significant step towards the mandatory nature of this ESG shift comes from the Qatar Central Bank’s policy evolution. The institution issued supervisory principles for ESG by providing banks with a structured approach towards climate risk, governance expectation and responsible lending.
These principles have been accurately structured to help financial institutions navigate emerging climate related pressures while guaranteeing that banking practices reflect national and international sustainability priorities. From a corporate perspective, the Qatar Financial Centre Regulatory Authority has also introduced new sustainability reporting rules which came into effect on January 1, 2026. These requirements apply to larger regulated companies and mandate the preparation of yearly sustainability reports aligned with IFRS S1 and S2 disclosures.
The key development to note is that Qatar’s mandatory reporting policy is ideal for positioning the country as a regional leader in responsible finance and innovation. Its expanding regulatory ecosystem combined with a rapid growth in ESG investments has cemented its placement as a regional center for sustainable finance. Taking this ESG development a step further, mandatory ESG reporting is key to reinforcing strong commitments to transparency, enhanced reporting and ethical technology adoption.
Key Compliance Requirements
The IFRS S1 and S2 disclosures have proven to be instrumental to Qatar’s ESG objectives. Primary compliance requirements for these disclosures include:
- Materiality and Scope (S1): This prioritizes the disclosure of all material information regarding sustainability-related risks and opportunities which could impact a company’s cash flow and financial position.
- Climate-Specific Disclosures (S2): As earlier discussed, the S2 aspect of the IFRS disclosures focuses on the climate impact of corporate activities. This would include physical climate risks such as floods and heat stress and transition risks such as carbon pricing. It is also worth noting that climate disclosures in Qatar also relate to positive environmental initiatives by corporations to promote sustainability measures in the country.
The Four-Pillar Framework
The IFRS S1 and S2 disclosures can be narrowed down to four key pillars:
- Governance: covers processes, controls and procedures which monitor a company’s sustainability/climate risks
- Strategy: relates to how sustainability/climate issues are integrated into business strategy and financial planning
- Risk Management: the processes used to identify, assess, and prioritize risks
- Metrics and Targets: Performance indicators such as the scope 1, 2 and 3 emissions for S2 and progress against goals
Final Thoughts
Qatar’s mandatory reporting and disclosure is an ideal strategy for ensuring that its sustainability commitments can be achieved in record time. Corporate participation is bound to play a crucial role in this regard as the ability for companies to provide the requisite information to regulatory bodies will prove pivotal in corporate relationships with institutions the Qatar Stock Exchange and the Qatar Central Bank.
Once alignment is achieved, corporations are guaranteed to be in stronger sustainability positions that will be beneficial to business operations and ESG goals.
References
- 2025 Sustainable Finance Framework, https://www.qcb.gov.qa/Documents/Sustainable%20Lending%20-%20English.pdf
- QFC Regulatory Authority issues the GENE (Corporate Sustainability Reporting) and Minor and Technical Amendments Rules 2025, https://www.qfcra.com/news/notification-qfc-regulatory-authority-issues-the-gene-corporate-sustainability-reporting-and-minor-and-technical-amendments-rules-2025/
- Introduction to the ISSB and IFRS Sustainability Disclosure Standards, https://www.ifrs.org/sustainability/knowledge-hub/introduction-to-issb-and-ifrs-sustainability-disclosure-standards
- Qatar ESG Investment Funds Market, https://www.kenresearch.com/qatar-esg-investment-funds-market