CLIMATE DISCLOSURE REQUIREMENTS FOR UTILITIES

1. Introduction

Climate disclosure requirements for utilities concern the legal and regulatory duties of electricity, gas, water, and other infrastructure providers to report information about their greenhouse-gas emissions, climate-related financial risks, transition strategies, and exposure to physical climate hazards. These requirements are particularly important for electricity utilities because generation and network infrastructure can be both significant sources of emissions and highly vulnerable to floods, droughts, heatwaves, wildfires, and other climate-related events.

Climate disclosure promotes transparency, investor protection, regulatory accountability, and informed energy-transition planning. In South Africa, the disclosure landscape combines company, environmental, securities-market, and climate legislation with developing international sustainability-reporting standards.

2. Principal Elements of Climate Disclosure

Modern disclosure frameworks generally require utilities to provide information concerning governance, strategy, risk management, metrics, and targets. IFRS S2, effective for annual reporting periods beginning on or after 1 January 2024, establishes a global framework for reporting material climate-related risks and opportunities. It covers both physical risks and transition risks that could reasonably affect an entity's prospects.

Utilities applying such standards may need to disclose Scope 1, Scope 2 and Scope 3 greenhouse-gas emissions, climate-related targets, capital deployment, physical and transition risks, internal carbon pricing where applicable, and relevant climate-related governance arrangements.

3. South African Regulatory Framework

South Africa's Climate Change Act 22 of 2024 creates an overarching statutory framework for an effective climate response and transition toward a low-carbon and climate-resilient economy. Most of the Act commenced on 17 March 2025, although specified provisions remained excluded from that commencement proclamation.

The Act provides mechanisms for obtaining climate-related information and establishes offences for specified failures involving required information or compliance obligations. Section 35, for example, provides penalties for certain failures to supply required data and for providing false or misleading information.

For listed utilities, the Johannesburg Stock Exchange (JSE) also provides Sustainability and Climate Change Disclosure Guidance. Importantly, this guidance is voluntary, rather than itself constituting a general mandatory disclosure regime. Its updated approach considers alignment with IFRS S1 and IFRS S2 and assists South African issuers in producing consistent climate information.

4. Importance for Electricity Utilities

Climate disclosure requires utilities to connect environmental risks with their financial and operational consequences. A coal-intensive electricity producer, for example, may face carbon constraints, financing risks, stranded-asset exposure and technology-transition costs. Network utilities may face physical risks from extreme temperatures, storms and flooding.

Disclosure therefore allows regulators, investors and other stakeholders to evaluate whether management is adequately preparing infrastructure for decarbonisation and climate resilience.

5. Case Law – Earthlife Africa Johannesburg v Minister of Environmental Affairs

Case Name/Citation: Earthlife Africa Johannesburg v Minister of Environmental Affairs and Others [2017] ZAGPPHC 58; 2017 (5) SA 227 (GP).

Facts: The dispute concerned environmental authorisation for the proposed Thabametsi coal-fired power station. Earthlife Africa challenged the authorisation process because climate-change consequences had not been adequately assessed.

Legal Issue: Whether climate-change impacts were relevant considerations when deciding whether to authorise major electricity-generation infrastructure.

Judgment: The High Court concluded that climate impacts were relevant and that an appropriate climate-change impact assessment was necessary.

Legal Principle/Ratio Decidendi: Environmental decision-making concerning carbon-intensive infrastructure must properly consider material climate-change consequences.

Significance: Although not itself a corporate climate-disclosure case, Earthlife Africa illustrates the broader legal movement toward requiring climate information to be identified and considered in energy-sector decision-making.

6. Case Law – Trustees for the Time Being of GroundWork Trust v Minister of Environmental Affairs

Case Name/Citation: Trustees for the Time Being of GroundWork Trust and Another v Minister of Environmental Affairs and Others [2022] ZAGPPHC 208.

Facts: Environmental organisations challenged governmental management of severe air pollution in the Highveld Priority Area, where coal-fired electricity generation and industrial activities were major concerns.

Legal Issue: Whether inadequate governmental measures for addressing harmful air pollution were compatible with constitutional environmental protections.

Judgment: The High Court recognised that poor air quality implicated the constitutional right to an environment that is not harmful to health and well-being.

Legal Principle/Ratio Decidendi: Environmental governance requires effective implementation of statutory and constitutional protections rather than merely formal policy commitments.

Significance: The case reinforces the importance of reliable environmental information, monitoring and governmental accountability surrounding emissions-intensive energy activities.

7. Conclusion

Climate disclosure is becoming an increasingly important component of utility governance and energy regulation. Utilities must increasingly identify physical and transition risks, quantify emissions, explain governance structures and communicate progress toward climate objectives. IFRS S1 and IFRS S2 provide an influential international baseline, while South Africa's Climate Change Act and JSE guidance strengthen the domestic climate-governance framework. Ultimately, credible disclosure connects climate accountability, financial transparency and long-term energy-system resilience.