There is a common assumption that ESG reporting in the Gulf is one thing, arriving at roughly one time, in roughly one shape. A business that complies in Bahrain, the thinking goes, is broadly positioned for everywhere else.
That assumption is now wrong, and the gap is widening rather than closing. Bahrain, Qatar and the UAE have each committed to sustainability reporting, but they have not committed to the same standard. A company that has done everything the Central Bank of Bahrain asks of it is not, by that fact, ready for IFRS S1 and S2.
This guide sets out what Bahrain actually requires, where the rest of the region has gone, and what the divergence means if you report in more than one jurisdiction.
What Bahrain actually requires
The Central Bank of Bahrain issued its ESG module in November 2023. It applies to listed companies and to CBB licensees falling within its scope, including banks, financing companies, insurance firms and investment firms, and it first applied to the reporting period ending December 2024.
So this is not a future obligation to prepare for. For entities in scope it has already been through at least one full cycle.
The accompanying ESG Reporting Guidelines set out a six-step process: understand the purpose of ESG, construct a working group, understand the reporting frameworks, conduct a materiality assessment, set targets and goals, and report.
The materiality assessment is the step most often skipped, and it is the one that determines whether the rest of the report is defensible. The guidelines describe plotting issues on a matrix against impact and importance, then sorting them into material, significant, moderate and minimal. Only the material issues carry a disclosure expectation. Without that assessment on file, a company has no documented basis for what it chose to report and what it chose to leave out.
The 31 KPIs
The guidelines set out 31 KPIs across the three pillars:
- Environmental: 10 KPIs, starting with environmental oversight and running through energy consumption, energy intensity and emissions.
- Social: 11 KPIs
- Governance: 10 KPIs
Each KPI is cross-referenced to the international framework it derives from, and each carries guidance on the main reporting components expected. Energy consumption, for example, is referenced to GRI 302-1 and 302-2, and asks for total energy consumed with a breakdown into indirect energy (electricity, heating, cooling purchased) and direct energy (classified renewable and non-renewable), along with a statement of the standards, techniques, assumptions and calculation tools used.
That last requirement is worth dwelling on. The disclosure is not the number. The disclosure is the number plus the method that produced it.
Reporting to the CBB
The mechanics are straightforward and the deadline is generous by compliance standards:
Companies shall submit an ESG report to the CBB within 6 months after the end of the financial year.
The report can be a standalone document or form part of the company’s annual report. Either is acceptable.
The guidelines also set out several requirements that are easy to read past and expensive to ignore:
- Consistency over time. Consistent formats, language and metrics from one period to the next, so periods can be compared. This is a constraint on the first report as much as on later ones, because the first report sets the baseline everything after it must match.
- No generic disclosure. The guidelines explicitly warn against disclosures that offer little value, and require any additional metrics to be sufficiently descriptive.
- No greenwashing. Unsupported claims and vague undefined terms such as “green” or “sustainable” are called out by name. Specific, measurable information is expected instead.
- Definitions, reference periods and assumptions must be provided where relevant.
- Explain non-disclosure. Where a company does not disclose, or discloses only partially, it must explain why. Silence is not an option; a reasoned explanation is.
Notably, the guidelines do not impose an external assurance requirement over the ESG report. That is a real difference from where several other jurisdictions are heading, and it is worth watching rather than relying on.
Why this is not IFRS S1 and S2
Here is the point that catches groups out.
Bahrain’s framework is referenced throughout to the Global Reporting Initiative, the Task Force on Climate-related Financial Disclosures, the Sustainability Accounting Standards Board, the Climate Disclosure Standards Board, CDP and the Integrated Reporting Framework.
It is not built on IFRS S1 and IFRS S2, the ISSB standards. The guidelines do not reference them.
This matters for three practical reasons.
The unit of analysis differs. GRI is built around impact materiality, meaning the company’s effect on the world. IFRS S1 and S2 are built around financial materiality, meaning sustainability risks and opportunities that could reasonably be expected to affect the entity’s cash flows, access to finance or cost of capital. Those two questions produce different disclosures from the same underlying data.
The connectivity requirement differs. IFRS S1 requires sustainability disclosures to be reported at the same time as the financial statements and for the same reporting entity. A standalone ESG report filed six months after year end does not meet that expectation.
The climate detail differs. IFRS S2 has specific requirements around scenario analysis, Scope 3 emissions and industry-based metrics that a TCFD-referenced framework touches more lightly.
So a Bahrain entity that has run its CBB reporting cleanly for two cycles has built something genuinely useful: governance structures, data collection, a materiality process. What it has not necessarily built is an IFRS S1 and S2 compliant report.
Where the rest of the GCC has gone
Qatar has moved decisively to ISSB. The Qatar Central Bank issued a Sustainability Reporting Framework applying IFRS S1 and S2 to regulated banks and insurers, effective from 1 January 2026, with a phased approach and transition reliefs that acknowledge differing levels of readiness.
The UAE requires listed companies to align with IFRS S1 and S2 from FY2026, building on the Securities and Commodities Authority’s existing mandatory ESG reporting requirement.
Saudi Arabia has signalled ISSB as the expected future standard, and Tadawul has published ESG disclosure guidance, but a firm mandatory date has not been confirmed. Businesses in the Kingdom are in a preparation window rather than a compliance one.
Bahrain continues with the CBB module described above.
The result is that a group with entities in Bahrain and Qatar now has two sustainability reporting regimes running on two different conceptual bases, on two different timetables.
What this means if you operate across the GCC
Three practical consequences.
Build the data layer once, at the higher standard. The expensive part of sustainability reporting is not the document. It is collecting reliable, auditable data on energy, emissions, workforce and governance, with methods documented. If any entity in the group faces IFRS S1 and S2, build the data layer to that standard and report down to the lighter framework where permitted. Doing it the other way round means collecting twice.
Do not treat the CBB report as evidence of ISSB readiness. If a lender, investor or parent asks whether the group is IFRS S1 and S2 ready, a completed CBB ESG report is not the answer to that question. Being honest about the gap is cheaper than being found out in a due diligence process.
Fix the materiality assessment first. It is the foundation of both frameworks, and it is the piece most often missing. A documented materiality process transfers across regimes even when the disclosure format does not.
One further point of confusion worth clearing up, because the acronyms are one letter apart. ESG reporting is not the same thing as Economic Substance Regulations (ESR), which is a separate Bahrain tax and corporate compliance regime with its own annual return and its own deadline. Businesses regularly conflate the two, and they are handled by different teams for different regulators.
A note on scope and sources
The specifics above are drawn from the CBB’s published ESG Reporting Guidelines. The binding instrument is the ESG module in the CBB Rulebook, and the precise scope of application to particular licensee categories should be confirmed against the Rulebook for your own entity rather than assumed from the guidelines. Regional requirements in Qatar, the UAE and Saudi Arabia continue to develop, and the position in each should be checked against the current regulator publication before a reporting decision is made.
SRR advises on ESG and sustainability reporting readiness, materiality assessments, data collection and disclosure preparation, alongside IFRS financial statement preparation for businesses in Bahrain. We do not provide assurance over sustainability reports, and we are not a licensed audit firm.