Oman has taken a further significant step in the development of its ESG and sustainability reporting framework.
By Decision E/7/2026, the Financial Services Authority (FSA) has formally adopted the IFRS S1 and IFRS S2 International Sustainability Disclosure Standards for the preparation and audit of financial reports and sustainability reports of listed public joint-stock companies and financial institutions.
This development follows the introduction of compulsory ESG reporting requirements for MSX-listed companies and reflects Oman’s continued alignment with international sustainability reporting standards and investor expectations.
What does the decision provide?
Under Article I, IFRS S1 and IFRS S2 are now formally adopted for:
- listed public joint-stock companies; and
- financial institutions.
The decision therefore moves sustainability disclosure further into the core regulatory reporting framework, rather than leaving ESG reporting as a standalone or purely voluntary exercise.
This is particularly significant for boards, compliance teams, legal advisers, finance functions and auditors, as sustainability-related disclosures will increasingly be treated as part of mainstream corporate governance and reporting obligations.
Implementation timeline
The FSA has adopted a phased implementation timetable. IFRS S1 must be fully applied from 1 January 2029. IFRS S2 must also be fully applied from 1 January 2029, with the exception of Scope 3 greenhouse gas emissions disclosures, which become mandatory from 1 January 2030.
This phased approach is consistent with the FSA’s prior consultation and workshop on the gradual implementation of IFRS S1 and IFRS S2 in Oman.
The additional lead time for Scope 3 reporting is commercially important, given the practical challenges often associated with collecting value-chain emissions data from suppliers, customers and other third parties.
Why this matters
IFRS S1 introduces a global baseline for disclosure of sustainability-related risks and opportunities that may affect an entity’s financial position and prospects.
IFRS S2 focuses specifically on climate-related risks and opportunities, including governance, strategy, risk management, metrics and targets.
For Omani issuers and financial institutions, this should improve consistency and comparability of disclosures for investors, lenders and other stakeholders, while bringing the local framework closer to international market practice. This is also likely to be of particular relevance in financing, capital markets and M&A transactions, where ESG and climate-related diligence is increasingly a key workstream.
Enforcement and penalties
The decision also introduces an express enforcement mechanism. In the event of non-compliance, Article IV permits the imposition of administrative penalties, including:
- a warning;
- suspension from practice for up to two years; and
- striking off from the Accountants and Auditors Register.
This is a clear indication that compliance with the new standards is intended to have regulatory force.
Looking ahead
Although the implementation dates are still some years away, affected entities should begin preparations now.
In practice, this is likely to require enhanced governance structures, robust internal controls around ESG data, and early consideration of climate-related reporting methodologies, particularly in relation to future Scope 3 emissions reporting.
This decision represents another important milestone in Oman’s evolving ESG and sustainability framework and reinforces the broader regional move towards internationally aligned disclosure standards.
With deep experience in the Omani market and its regulatory landscape, our team of local and international specialists is ideally positioned to support businesses as they navigate their ESG compliance journey. For more details, please contact our Oman team.
