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A strategic imperative, not a compliance footnote
The ongoing global shift toward a more unified, standardised approach to sustainability reporting has made it abundantly clear that environmental and social accountability is no longer optional for any leading organisation. It is, in numerous ways, demonstrably foundational to business resilience, risk management, and investor trust. With this in mind, Sunshine Holdings PLC has initiated a structured adoption pathway for IFRS S1 and S2, the sustainability and climate disclosure standards introduced by the International Sustainability Standards Board (ISSB), effective from 1 January 2025. These standards have been formally adopted in Sri Lanka by CA Sri Lanka as part of the SLFRS Sustainability Disclosure Standards, further highlighting the Group’s alignment with both global expectations and national regulatory mandates.
Being a listed diversified conglomerate operating across multiple climate-sensitive and regulation-intensive sectors, Sunshine, keenly aware of its role as a market-shaping institution, recognises the strategic value of embedding these standards early, not simply to meet expectations, but to shape how value is created, preserved, and communicated.
2024-25: A turning point
The period reviewed in this integrated report saw Sunshine make significant headway in its sustainability disclosure journey. At the outset, the Group undertook a formal gap analysis, ably supported by Deloitte, to assess its disclosure readiness against the ISSB’s requirements. To support implementation, a cross-functional working group comprising representatives from Finance, Sustainability, HR, and Risk will be established to coordinate efforts across the Group. This exercise helped us understand that, while we’re certainly not starting from scratch, full compliance will take more work, requiring systemic effort, particularly in the areas of climate data, scenario modelling, and value chain metrics.
What is already in place, to be sure, is a robust governance infrastructure. To illustrate, oversight of ESG performance takes place at the Board level through a Risk Committee whose mandate now formally includes sustainability-related risks. On the operational side of things, as a next step, cross-functional collaboration between Finance, HR, and business units will help mainstream ESG thinking into planning, performance, and reporting cycles. The Remuneration Committee, meanwhile, will evaluate how ESG KPIs could be tied to executive compensation, an important signal of internal alignment and Board-level commitment.
From strategy to action
Sunshine’s ESG approach is not isolated from its core business model but is, rather, interwoven into strategy and operational execution. Sustainability has been long identified as one of four strategic enablers for the Group, alongside synergy, focus, and innovation. In practice, this translates into tangible outcomes across our three verticals:
- In Agribusiness, ESG priorities are reflected in replanting strategies, RSPO-certified operations, and early-stage climate resilience planning.
- In Healthcare, investments in local manufacturing address both access to medicine and import substitution, a key supply-chain risk mitigant.
- In the Consumer Goods segment, solar-powered logistics and sustainable packaging solutions are being rolled out as part of an integrated decarbonisation push.
These business-unit level actions are now being formalised through a governance lens, informed by stakeholder engagement exercises, internal risk registers, annual ESG materiality reviews, and emerging climate compliance obligations that are being mapped against operational risks and opportunities.
Disclosure gap
While strategic alignment is progressing, measurable disclosure, especially on climate, remains an area of ongoing development. The Group currently tracks several operational indicators, including energy consumption, safety metrics, and workforce composition. However, a formal GHG emissions inventory is still under development, and Scope 1, 2, and 3 emissions are yet to be published.
Scenario analysis, a core component of SLFRS S2, is also at an early stage. Although Sunshine has begun to map transition and physical risks qualitatively across its segments, alignment with international scenario pathways, such as those outlined by the Network for Greening the Financial System (NGFS) or the International Energy Agency (IEA), is still under evaluation.
The first-year focus, therefore, is not full disclosure, but credible groundwork, prioritising the creation of internal controls, assurance pathways, and data systems that will support consistent reporting from 2025 onwards.
A pragmatic first-year
In line with transitional reliefs provided under SLFRS S1 and S2, Sunshine will adopt the standards in its 2024-25 reporting cycle with certain exemptions. These include the omission of comparative sustainability disclosures from the 2023-24 fiscal year and limited climate-related metrics where underlying systems are not yet fully operational. This staggered approach allows the Group to uphold the integrity of its disclosures without overextending capacity or introducing unreliable data.
Roadmap to full adoption
It bears repeating that credible sustainability disclosure is not a one-off compliance task but an institutional shift – one that requires governance alignment, operational discipline, and cultural buy-in across the organisation. To this end, the Group has outlined a pragmatic, phased roadmap to ensure compliance with SLFRS S1 and S2 by the end of FY 2025-26.
- Q1 2025-26 will be devoted to aligning internal governance structures with the demands of SLFRS, while undertaking a comprehensive sustainability risk assessment across business units. This initial phase will set the tone for what follows, ensuring that oversight is clearly assigned and risk is properly surfaced.
- Q2 2025-26 will focus on the build-out of data infrastructure to support reliable measurement specifically, systems to capture Scope 1 and Scope 2 greenhouse gas emissions. Accuracy, consistency, and auditability will be key.
- Q3 2025-26 will prioritise internal capacity building. Senior management and the Board will participate in targeted training to deepen their understanding of SLFRS disclosure requirements and assurance expectations.
- Q4 2025-26 will see a formal readiness review, an internal audit of sustainability-related disclosures to test the strength of reporting systems and surface any gaps before moving toward external assurance.
Board oversight and commitment going forward
Our Board of Directors remains closely engaged with the SLFRS S1/S2 readiness programme, viewing sustainability reporting not as a footnote to financial performance reporting, but as an evolving mechanism for strategic clarity and risk foresight. As assurance expectations rise and disclosure standards mature, Sunshine is positioning itself not merely to comply, but to lead through disclosure that is disciplined, constructive, and adequately reflective of long-term value creation.