top of page

Kenya ESG and the SDGs in Africa

Environmental Social and Governance criteria (ESG) is gaining importance in Africa as a means for businesses to demonstrate their dedication to ethical business practices and to reduce the risks involved with doing business there.

Kenya ESG and the SDGs in Africa

Joseph in Kenya, Africa

Many African nations are encouraging ESG practices, and numerous programs, like the Sustainable Development Goals (SDGs) of the United Nations, are working to advance sustainable development all throughout the continent.

However, there are still a number of issues that need to be resolved, such as a lack of regulation, capacity issues, and a lack of understanding of the significance of ESG. ESG practices are not consistently implemented across Africa.

Companies in Africa are integrating ESG practices into their operations in various ways. Several instances include:

Implementing renewable energy projects

To lessen their carbon impact and become more sustainable, many African businesses are investing in renewable energy projects. The Kenyan tea business James Finlay erected a 10 MW solar power plant to power its facilities. Similarly, the South African brewery, SABMiller, has invested in various African renewable energy projects, including a 3.6 MW solar power plant in Tanzania. 

Investing in local communities

To enhance social and economic conditions and forge closer ties with stakeholders, many African businesses are also investing in their communities. To assist conservation efforts in Kenya, for instance, Woolworths's South African store partnered with the Born Free Foundation to launch several community development programs throughout Africa. 

Fostering good governance: African businesses are also promoting ethical corporate conduct. For instance, many companies have formed compliance procedures and enacted codes of conduct to guarantee that they conduct business ethically and openly. 

Investing in employee training and development: As a means of enhancing their social performance, many African businesses are now investing in the training and development of their employees. To aid in developing new skills and professional advancement, this can involve offering training and educational opportunities to staff. 

Protecting natural resources: To maintain the environment and lessen its environmental impact, several African businesses are conserving natural resources like water and forests. For instance, the Kenyan tea company James Finlay has implemented several programs to safeguard forests and water supplies, such as planting more than 1 million trees and executing a water-conservation program. 

Adopting sustainable agriculture practices: To lessen their environmental impact and increase the long-term viability of their operations, several African enterprises in the agriculture industry are using sustainable practices. Unilever Tea Kenya, a company that produces tea in Kenya, has, as an illustration, put into effect several sustainable agriculture techniques, such as the use of drip irrigation and the use of cover crops to enhance soil health. 

Breakdown of ESG Criteris and their key goals in Kenya

Environmental Principles

Kenya has a robust legal and policy framework for protecting and restoring the environment. The right to a clean and healthy environment is fundamental in the Kenyan Constitution. The government is required to manage natural resources sustainably and safeguard biodiversity. Kenya's government has also accepted the Paris Climate Agreement and prohibited using and importing plastic bags. The Kenya Green Bond Program encourages innovation in the financial industry and the growth of a domestic bond market. For commercial banks and mortgage finance businesses, the Central Bank of Kenya published guidelines on managing climate-related risk, instructing them on including this management in their business choices and operations.

At COP26, Kenya also made several commitments, including the goal of achieving 100% renewable sources of energy by 2030 and 100% clean cooking by 2028 as steps toward the global zero emission objective. 

Social Principles

Employees are now searching for more flexible work settings and are increasingly interested in organizations that actively promote ESG in their culture and policies as a result of the Covid-19 pandemic. Parliament then presented the Employment (Amendment) Bill 2021 to address employee burnout and encourage work-life balance.

Beyond the conventional corporate social responsibility PR events, manufacturers have opted to adjust to new regulatory developments and rising customer demand for socially responsible behavior from businesses. Additionally, customers are more eager to associate with firms that care about sustainability and the environment and are ready to criticize unethical enterprises. With the CMA providing recommendations and the NSE setting a target for Kenya's listed enterprises to entail at least a third of board members being women, gender equality is also becoming a significant priority.

Foreign investors continue to prioritize protecting indigenous people. Many projects now include Indigenous People Plans to guarantee that local communities obtain economic and social advantages that respect their dignity and tradition. With governments regulating data protection and Kenya enacting the Data Protection Act 2019, which will impact how enterprises manage and gather data, data privacy is becoming more crucial. When collecting personal data, organizations will need to take into account data collection restrictions, usage limitations, openness, involvement, and purpose. 

Governance Principles

Governance issues have risen in importance to promote and maintain economic growth. The Companies Act of 2015 holds company directors personally liable for ensuring compliance. Many businesses have joined standards and report indexes like the Global Reporting Initiative (GRI) to adhere to international best practices. Senior management and a board of directors must actively participate in developing and putting into practice ESG initiatives, reporting requirements, and policies, according to recommendations released by the CBK and NSE. The CBK Guidance needs Financial Institutions to provide the Task Force on Climate-related Financial Disclosures with information about climate change. 

Following the publication of the NSE ESG disclosure manual in November 2021, listed companies have been given a year to integrate and adhere to the GRI-compliant ESG reporting standards. Additional measures are needed when selecting board members and senior executives in organizations due to these mandates and the broad interest in ESG. This is because the chief executive officer, or CEO, is regarded as the company's ESG champion. There are more employment openings in this field, and job descriptions now call for candidates who can comprehend and apply ESG best practices. 

Climate change is a major threat in Africa

A rising understanding among Member States that a sustainable development model for current and future generations offers the most excellent way forward for eradicating poverty and enhancing the lives of people everywhere led the United Nations to announce its sustainable development agenda in 2015. Climate change started to impact people's consciousness in the same period significantly. No country in the world is immune to the effects of climate change since the polar ice caps are melting, the sea level is rising, and extreme weather events are becoming more often and violent.

Reducing the greenhouse gas emissions that contribute to climate change will aid in developing a more sustainable global economy. Therefore, the international community must achieve the Sustainable Development Goals of the UN and the emission reduction targets outlined in the 2015 Paris Climate Agreement.

Humanity's future and present well-being depend on sustainable development and climate action. 

The Paris Agreement

Increasing global temperatures, ice melt, and rising sea levels are just a few of repercussions of climate change that the globe is already experiencing. Flooding, drought, the eviction of millions of people, poverty, hunger, and the lack of access to essential services are the results of this. Additionally, it leads to conflict and stifles economic growth. To address climate change and complete the 2030 Agenda for Sustainable Development, immediate action is required. The level of greenhouse gases has increased to a new high and is predicted to keep improving. 

Following the Paris Agreement, global warming will be kept at 1.5°C above pre-industrial levels. This can be accomplished if greenhouse gas emissions peak before 2025, drop by 43% by 2030, and reach net zero by 2050. The nation's current pledges to cut emissions are insufficient to achieve this goal. 

How governments in Africa are fighting climate change:

Africa's governments are making various efforts to combat climate change and advance their sustainable development objectives (SDGs). For instance, the government of Kenya has put into effect different laws and programs to lower greenhouse gas emissions and increase the use of renewable energy sources. A few of these are:

  • The Kenya Green Bond Programme (KGBP) was established to stimulate investments in projects and activities that positively impact the environment while fostering innovation in the financial industry. The Kenya Bankers Association, the Climate Bonds Initiative,  Financial Sector Deepening Africa, and the Nairobi Securities Exchange (NSE), worked together to construct the KGBP. 

  • Due to Kenya's ban on plastic bags, manufacturers are looking for alternative and environmentally acceptable packaging choices. As a result, there is now less dangerous plastic trash in the environment. 

  • As part of COP26, Kenya pledged to use only renewable energy by 2030. (Conference of Parties). This is a significant initiative to lessen the nation's reliance on fossil fuels and encourage the use of renewable energy sources. 

  • Kenya's government has established a target to stop deforestation by the year 2030 to address the problem of widespread deforestation. To do this, the government has implemented policies that include expanding the tree cover, preserving biodiversity, and supporting sustainable resource management. 

  • The African Renewable Energy Initiative intends to raise $10 billion to build 300 GW or more renewable energy by 2030. 

  • The African Development Bank (AfDB) has pledged to spend $24 billion on climate change adaptation and mitigation projects involving renewable energy. 

  • The Climate Resilient Green Economy (CRGE) policy of the African Union (AU) aims to advance low-carbon, climate-resilient development and green economic growth throughout the continent. 

  • Additionally, some African nations are fostering the development and use of clean technology by using policy and legal tools, including laws, rules, and standards, to facilitate the transition to a low-carbon economy. 

While African nations are making strides in the fight against climate change, much more has to be done. It is vital to note. Increased droughts, floods, and deserts are already impacting the continent due to climate change; therefore, these efforts must be enhanced for Africa to achieve the targets outlined in the Paris Agreement. 

Will Kenya achieve their target on SDGs before 2030?

Sustainable Development Goals (SDGs) are a complex undertaking that governments, corporations, and individuals must work continuously to achieve. The SDGs were created as a global call to action to safeguard the environment, eradicate poverty, and guarantee that everyone lives in peace and prosperity. 

It is challenging to say whether Kenya will fully fulfill the SDGs by the intended deadline of 2030. Kenya has made strides in some areas, such as expanding access to electricity and enhancing maternal health. However, it still has a long way to go in overcoming issues like poverty, inequality, and climate change. The SDGs are interconnected; hence, advancement in one area can promote advancement in other locations, and vice versa; likewise, a lack of improvement in one place might impede progress in other areas. 

However, the National Development Plan, Vision 2030, and Kenya's policies align with the SDGs. The Kenyan government has also created a variety of approaches and programs that are helping to advance the SDGs by reducing greenhouse gas emissions and expanding the usage of renewable energy.

It's critical to remember that all stakeholders must work together to achieve the SDGs, including the government, business community, civil society, and individuals. They must keep cooperating to overcome obstacles and accomplish the SDGs by 2030.

bottom of page