ESG compliance in Saudi Arabia: what suppliers need to know in 2025
Saudi Arabia's ESG regulatory landscape is changing faster than most suppliers realise. Driven by Vision 2030 — the Kingdom's programme to diversify the economy and reduce dependence on oil — the regulatory environment for businesses operating in or supplying to Saudi Arabia is converging with international standards at pace. If you supply Saudi companies, or if your Saudi buyers supply large international buyers, ESG compliance obligations are already reaching your business.
The Tadawul ESG Disclosure Guidelines
The Saudi Exchange (Tadawul) introduced mandatory ESG disclosure guidelines for listed companies in 2021, updated in 2023. Listed Saudi companies must now report on environmental, social, and governance indicators — and are expected to collect comparable data from their supply chains. If you supply a Tadawul-listed company, you should expect to receive ESG questionnaires covering your environmental performance, labour practices, and governance standards.
The Tadawul guidelines align with the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) frameworks — the same frameworks used by large buyers in Europe and North America. This means the ESG evidence you build for one buyer is largely transferable to others.
IFRS S1 and S2: the incoming mandatory framework
The Capital Market Authority (CMA) of Saudi Arabia has announced a phased adoption of IFRS Sustainability Disclosure Standards — IFRS S1 (general sustainability disclosures) and IFRS S2 (climate-related disclosures) — on a mandatory basis for listed companies from 2026 and 2027 respectively. These are the same standards being adopted across the GCC, the EU, and major Asian markets.
IFRS S1
Requires companies to disclose material sustainability-related risks and opportunities across their value chain — including supply chain ESG performance.
IFRS S2
Requires climate-related disclosures aligned with the TCFD framework — including Scope 1, 2, and 3 greenhouse gas emissions. Scope 3 includes supplier emissions.
Timeline
Voluntary adoption from 2024. Mandatory for listed companies from 2026 (S1) and 2027 (S2). Suppliers to listed companies should begin preparing now.
SAMA ESG guidance for the financial sector
The Saudi Central Bank (SAMA) has issued ESG integration guidance for banks, insurance companies, and financial institutions operating in Saudi Arabia. This guidance requires financial institutions to assess the ESG performance of their corporate clients and lending portfolios. If your business has financing relationships with Saudi banks, your ESG profile will increasingly influence credit decisions and lending terms.
The EU connection: CSRD and LkSG reach Saudi suppliers
Saudi companies with operations in the EU, or Saudi suppliers to large EU buyers, are subject to EU supply chain legislation regardless of where they are headquartered. The EU Corporate Sustainability Reporting Directive (CSRD) and Germany's Supply Chain Due Diligence Act (LkSG) both require large EU companies to collect ESG compliance evidence from their entire supply chain — including suppliers in Saudi Arabia and across the GCC.
This means that a Saudi manufacturer supplying a German automotive company, or a Saudi logistics provider supplying a French retailer, will receive ESG questionnaires structured around European regulatory requirements. The ESG Stress Free platform covers all of these frameworks within a single compliance profile.
What Saudi suppliers need to prepare
Environmental performance baseline
Calculate your Scope 1 and Scope 2 greenhouse gas emissions. Saudi buyers and their international partners will ask for this data. Use IPCC or DEFRA emission factors for your energy consumption.
Labour and human rights policies
Document your policies on working hours, wages, freedom of association, and non-discrimination. Saudi Labour Law compliance is the baseline — international buyers will ask for evidence of implementation, not just policy existence.
Governance documentation
Prepare documentation of your anti-corruption policies, board governance structure, and whistleblowing mechanisms. SAMA-regulated buyers and Tadawul-listed companies will require this.
Cyber security posture
The Saudi National Cybersecurity Authority (NCA) Essential Cybersecurity Controls (ECC) define the baseline for organisations operating in Saudi Arabia. International buyers increasingly include cyber security in their supplier questionnaires.
Supply chain mapping
IFRS S2 and CSRD both require Scope 3 emissions data — which means mapping your own supply chain. Begin identifying your key suppliers and their emissions profiles.
Vision 2030 and the commercial case for ESG
Beyond regulatory compliance, Vision 2030 creates a commercial incentive for Saudi businesses to build strong ESG credentials. The programme explicitly targets foreign direct investment, international partnerships, and the development of non-oil export industries — all of which require demonstrable ESG performance. Saudi companies seeking to expand internationally, attract international investors, or participate in global supply chains will find that ESG compliance is increasingly a prerequisite, not an optional extra.
The Public Investment Fund (PIF), with a portfolio of over 200 companies and assets under management exceeding $900 billion, has published its own ESG framework and is actively integrating ESG criteria across its portfolio. Companies within the PIF portfolio — and companies seeking to supply them — should treat ESG compliance as a commercial priority.
Operating in Saudi Arabia?
ESG Stress Free covers Tadawul, IFRS S1/S2, SAMA guidance, NCA ECC, and the international frameworks your Saudi buyers' buyers require — in one platform.
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