Environmental, social and governance disclosure regulations are being enhanced around the world and locally, particularly for listed firms at the Nairobi Securities Exchange
Businesses that strive to maintain responsible corporate citizenship standards are bound not only to track and measure their Environmental, Social and Governance (ESG) impacts, but to be transparent about them through public disclosures.
ESG is ultimately a framework upon which companies develop and deploy their sustainability initiatives, including identifying, assessing and managing risks that emanate from social and environmental issues within their entire value and supply chains.
As a university student in the early 1990’s the compulsory reading list included “Our Common Future”, a book that placed environmental issues and sustainable development firmly on the political agenda.
The definition back then of sustainable development was; “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. Businesses were at a point of need in 1987 when the author penned this, and, today, sustainable development is lauded for creating critical and economic landscape.
Long term thinking and ensuring that resources are deployed holistically for the long term is essential to any business entity – it is important to consistently track, measure and report ESG impacts for public scrutiny. It is the right thing to do.
Besides Kakuzi, listed firms such as Safaricom, KCB, and others, have publicly made similar disclosures. In time other companies will follow suit, especially as the Nairobi Securities Exchange strengthens its guidelines and provides invaluable training on what these mean and how companies can comply. A progressive approach indeed.
As with any other new concept, it is important for the right thinking members of the public to scrutinize these reports and ensure that they strengthen the economy.
We must also recognise that the word sustainable means ‘sacrifice’. If dams are to fill with water, for example, they require large water catchment land areas. These areas must be conserved and managed to provide the water needed to fill the dams. Water catchment areas may appear like free open land and remain attractive for development, but that should be avoided. We must sacrifice this land to water catchments and not convert it for other uses.
Sustainability also requires long term thinking – by far, sustainability has a significant positive effect on companies, and it is all of knowledge development, technology transfer and building capacities.
We constantly hear the call for farmers to embrace avocado or macadamia farming as the new ‘green gold’. This is indeed a laudable aspiration, but if we do not teach our farmers how to grow these crops to meet our consumers’ exacting demands, then we are in danger of failing.
Again, in a world of sustainability, commitment from all actors is required. That is the only way that we will be able to recognise what is necessary for Kenya and Kenyan farmers to be a powerhouse of superfood production. We must be seen as a country that can, and does supply the region and beyond with quality ‘superfoods’ like avocado, nuts and berries; foods which are safe to eat, and are grown responsibly.
In my view, ESG reports need to be seen and consumed as critical business fundamentals review tools. They provide critical information for various stakeholders beyond the conventional profit and loss reports, and if well done, would provide a rich outline of how business organisations can correct their economic, social and governance touchpoints. It is the right thing to do.
