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NOTABLE TRENDS AND DEVELOPMENTS IN ENVIRONMENTAL SOCIAL AND GOVERNANCE IN KENYA
All Insights / By Alakonya Law LLP
NOTABLE TRENDS AND DEVELOPMENTS IN ENVIRONMENTAL SOCIAL AND GOVERNANCE IN KENYA
Environmental Social and Governance (ESG) is no longer a buzz word, it has turned out as one of the most discussed tools in corporate boardrooms. ESG has emerged as arguably the most important aspect of corporate governance, since investors are using it as a measure and indicator of making key investment decisions.
This importance has led to various trends and developments in Kenya in the recent years as outlined herein.
a) Kenya became one of the first countries to ratify the Paris Climate Agreement, which subsequently led to the government banning the manufacture, importation and use of plastic bags in commercial and household packaging in Kenya.
b) The Nairobi Securities Exchange has developed an ESG Disclosure Manual to guide listed companies in Kenya on ESG reporting. This manual provides, among others, that ESG reporting should be centered on a materiality basis – that companies should only report on topics that are sufficiently important and relevant to them.
c) The Capital Markets Authority published the Kenya Sustainability Reporting Standards [KSRS], which provides guidance on ESG disclosure by listed companies; giving energy consumption, water usage, waste management, and social and ethical practice as indicators.
d) Companies that are signatories to the Carbon Disclosure Project are working in line with the purpose of the Climate Change Act, 2016 which provides the legal framework to achieve low carbon climate development. The Carbon Disclosure Project helps in promoting transparency in environmental reporting by cities and companies in the world.
e) Kenya launched the Kenya Green Bond Programme to promote financial sector innovation by developing a domestic green bond market to enhance ‘green’ investments; which are basically bonds which the issuer commits to use the proceeds in a transparent manner and exclusively to finance projects or business activities with an environmental benefit.
f) The Central Bank of Kenya issued a guidance on climate related risk management for financial institutions, guiding them on how to manage their climate related risks by integrating climate management in their business decisions.
g) Various industry players in different sectors in Kenya are coming up with voluntary ESG disclosure or reporting guidelines; like the Sustainable Finance Initiative (SFI) industry principles for the banking sector.
h) Employers are incorporating more flexible working environments, and ESG related policies and activities in their employment policies and cultures.
In conclusion, the noted trends and developments prove that ESG in Kenya is continuously growing, particularly in this era where consumers and investors are demanding more accountability and socially responsible behaviour from companies. Companies are being forced to shift from the usual annual corporate social responsibility event, and taking into account the various aspects of ESG. As the world economy continues to evolve, it is clear that ESG is here for the long-term; and as such, there is need for more companies to embrace the ESG as an essential part of their corporate governance in order to promote corporate sustainability.
Written by:
T.Kehonji
Kehonji@alakonyalaw.co.ke
21st March 2024
a) Kenya became one of the first countries to ratify the Paris Climate Agreement, which subsequently led to the government banning the manufacture, importation and use of plastic bags in commercial and household packaging in Kenya.
b) The Nairobi Securities Exchange has developed an ESG Disclosure Manual to guide listed companies in Kenya on ESG reporting. This manual provides, among others, that ESG reporting should be centered on a materiality basis – that companies should only report on topics that are sufficiently important and relevant to them.
c) The Capital Markets Authority published the Kenya Sustainability Reporting Standards [KSRS], which provides guidance on ESG disclosure by listed companies; giving energy consumption, water usage, waste management, and social and ethical practice as indicators.
d) Companies that are signatories to the Carbon Disclosure Project are working in line with the purpose of the Climate Change Act, 2016 which provides the legal framework to achieve low carbon climate development. The Carbon Disclosure Project helps in promoting transparency in environmental reporting by cities and companies in the world.
e) Kenya launched the Kenya Green Bond Programme to promote financial sector innovation by developing a domestic green bond market to enhance ‘green’ investments; which are basically bonds which the issuer commits to use the proceeds in a transparent manner and exclusively to finance projects or business activities with an environmental benefit.
f) The Central Bank of Kenya issued a guidance on climate related risk management for financial institutions, guiding them on how to manage their climate related risks by integrating climate management in their business decisions.
g) Various industry players in different sectors in Kenya are coming up with voluntary ESG disclosure or reporting guidelines; like the Sustainable Finance Initiative (SFI) industry principles for the banking sector.
h) Employers are incorporating more flexible working environments, and ESG related policies and activities in their employment policies and cultures.
In conclusion, the noted trends and developments prove that ESG in Kenya is continuously growing, particularly in this era where consumers and investors are demanding more accountability and socially responsible behaviour from companies. Companies are being forced to shift from the usual annual corporate social responsibility event, and taking into account the various aspects of ESG. As the world economy continues to evolve, it is clear that ESG is here for the long-term; and as such, there is need for more companies to embrace the ESG as an essential part of their corporate governance in order to promote corporate sustainability.
Written by:
T.Kehonji
Kehonji@alakonyalaw.co.ke
21st March 2024
