Ethiopia’s largest banks and corporations could be required to begin reporting climate-related risks from July 2026 under a draft roadmap released by the Accounting and Auditing Board of Ethiopia (AABE), marking the country’s first formal step toward adopting global sustainability disclosure standards.
The proposal outlines how Ethiopia could adopt the IFRS Sustainability Disclosure Standards, bringing climate and sustainability considerations into mainstream financial reporting. If approved, the first group of companies would start reporting for the financial year beginning July 2026, with the initial disclosures required within six months of the end of that financial year. For firms with a June 30 year-end, the first sustainability reports would therefore be due by December 31, 2027.
Under the draft, the adoption would unfold in four phases. The first stage would emphasise narrative climate disclosures under IFRS S2, allowing companies to adjust to the new reporting framework with transitional reliefs. Later phases would progressively expand reporting requirements, introducing limited quantitative disclosures and integrating broader sustainability reporting under IFRS S1 alongside climate standards. Full compliance with the international framework is targeted by the 2032/33 financial year, when the transitional measures would be removed.
The roadmap proposes a staggered implementation timeline based on the size and public accountability of reporting entities. Group 1 entities, which include Tier 1 financial institutions and the country’s largest IFRS reporting companies, would be the first to adopt the standards in the 2026/27 financial year. Group 2 entities, including Tier 2 financial institutions and federal state-owned enterprises, would follow in 2027/28, while Group 3 entities, such as regional state-owned enterprises and medium-sized IFRS issuers, would begin in 2028/29. Remaining IFRS issuers would join the reporting framework in 2029/30.
Small and medium enterprises reporting under the IFRS for SMEs Accounting Standard are not included in the draft roadmap at this stage. The document indicates that a distinct and proportionate sustainability disclosure template is envisaged for these issuers, to be developed separately at a later stage to reflect their scale and reporting capacity.
The roadmap also outlines the institutional architecture that would support the transition. Oversight would involve the Accounting and Auditing Board of Ethiopia, the National Bank of Ethiopia, the Ethiopian Capital Market Authority, the Ethiopian Securities Exchange, and other government ministries responsible for sector supervision.
Assurance requirements form another pillar of the proposal. Companies would initially be permitted to obtain Limited Assurance reports on their sustainability disclosures for up to two years before moving to mandatory Reasonable Assurance, which provides a higher level of verification. The draft indicates that failure to comply with reporting requirements could lead to penalties, public sanctions, or suspension of trading privileges for firms listed on the Ethiopian Securities Exchange.
The initiative is tied to Ethiopia’s broader environmental and economic strategy. The roadmap aligns with the country’s Climate Resilient Green Economy (CRGE) strategy and the Ethiopia Green Taxonomy, frameworks designed to guide climate investment and support low-carbon development. It also draws on experiences from African markets such as Kenya, Nigeria and Ghana, which have begun integrating sustainability disclosure frameworks into their financial systems.
The AABE has opened the draft roadmap for public consultation until March 25, 2026, allowing businesses, regulators and other stakeholders to comment before the standards are formally adopted.
The move comes as Ethiopia faces a significant climate financing gap. Government estimates suggest the country will require about 316 billion US dollars by 2030 to meet its climate mitigation and adaptation goals. Of this amount, roughly 63.2 billion US dollars is expected to be mobilised domestically, while 252.8 billion US dollars would need to come from international sources. Current climate finance flows remain well below those levels, averaging about 1.7 billion US dollars a year.
The AABE has opened the draft roadmap for public consultation until March 25, 2026, after which the proposal could be revised before a final decision on adoption.
If implemented, the proposed reporting framework would introduce the most comprehensive sustainability disclosure regime yet contemplated for Ethiopia’s corporate and financial sectors, while placing climate risk information more firmly at the centre of corporate reporting.