ESG Compliance in Kenya: What Businesses Should Prioritize in 2025
Environmental, Social, and Governance (ESG) principles are no longer optional; they’re fast becoming essential for Kenyan businesses aiming for credibility, resilience, and long-term growth. Institutional investors, customers, and regulators are now demanding transparency, sustainability, and ethical conduct.
Here’s what Kenyan businesses should focus on across the three ESG pillars, and how Azali can support leadership in weaving ESG into governance foundations.
1. Environmental (E): Protecting Kenya’s Planet
Kenya is increasingly aligned with environmental responsibility:
Regulatory Mandates: Companies must comply with laws such as the Environmental Management and Coordination Act (EMCA), the 2016 Climate Change Act, and NEMA requirements, including Environmental Impact Assessments (EIAs) and pollution controls.
Focus Areas for 2025:
Lowering carbon emissions through renewable energy use and efficiency.
Implementing waste management, recycling, and pollution controls.
Conserving water amid shortages by monitoring usage and reusing where possible.
Ensuring supply chains reflect environmental responsibility.
Mitigating biodiversity risks via sustainable land use.
Why It Matters: Kenya pledged to reach 100% renewable energy by 2030 and remains vulnerable to climate change, making environmental stewardship a strategic imperative.
2. Social (S): Empowering People and Communities
Building organizational trust starts with a strong social conscience:
Legal Foundations:
Fair labour and safety are mandated by the Employment Act and OSHA statutes.
Inclusivity is promoted by the Persons with Disabilities Act.
Corporate social responsibility (CSR), while not legally required, is expected from conscientious businesses.
Social Priorities for 2025:
Prioritize employee safety, well-being, fair pay, and work-life balance.
Champion diversity and inclusion across hiring, leadership, and workplace policies.
Engage communities through CSR initiatives such as educational outreach, health programs, or sustainability projects.
Uphold human rights and ensure ethical labour standards throughout operations.
Secure customer trust via strong data privacy practices.
3. Governance (G): Ethical, Transparent, and Accountable Leadership
Strong governance forms the backbone of ESG performance:
Regulatory Landscape:
The Companies Act, CMA’s Corporate Governance Code, and Ethics & Anti-Corruption Commission mandate accountability, transparency, and ethical conduct.
Data privacy requirements under Kenya’s Data Protection Act are also part of the governance blend.
Governance Focus for 2025:
Promote board diversity and independence - across gender, experience, and backgrounds.
Implement anti-corruption policies, ethical codes, and conduct regular internal audits.
Align executive pay with performance, ensuring transparency and accountability.
Respect shareholder rights and improve engagement and information sharing.
Increase transparency through ESG-linked disclosures or integrated reporting.
Trends in Reporting:
Mandatory ESG reporting for listed firms is underway.
ICPAK has indicated mandatory sustainability disclosure requirements:
2027 for public interest entities (PIEs)
2028 for Non-PIEs (Large Entities)
2029 for Non-PIEs (SMEs)
For Government organizations - to be communicated
Regulators such as CMA, NSE, and CBK are aligning with global standards, IFRS S1 & S2, and encouraging sustainable finance practices.
Benefits of ESG Compliance for Kenyan Businesses
a) Investor Confidence - ESG-aligned companies are seen as lower-risk, more trustworthy, and future-ready.
b) Access to Capital - Innovative schemes such as ESG-linked loans, where financial terms vary with sustainability performance, are emerging.
c) Reputational Edge - Demonstrating responsible practices bolsters brand trust with customers, employees, and regulators.
d) Operational Resilience - Embedding ESG yields long-term governance strength and prepares firms for climate or social challenges.
e) Future Readiness - Many regulators and investors are only increasing ESG scrutiny; early action builds preparedness.
How Azali Helps Embed ESG into Governance
Azali Certified Public Secretaries LLP offers a seamless integration of ESG into governance:
ESG Assessments & Strategy: Conduct gap analyses and plan ESG implementation - legal, operational, and strategic.
Policy Development: Create tailored environmental, social, and governance policies aligned with laws and global norms.
Reporting & Disclosures: Guide ESG disclosures, sustainability reporting, and preparatory alignment to IFRS S1/S2.
Board & Committee Support: Facilitate ESG oversight within board structures or sustainability committees.
Training & Workshops: Build organization-wide ESG awareness, from leadership to frontline staff.
Final Thoughts
In 2025, ESG is no longer optional for Kenyan businesses; it’s central to credibility, competitiveness, and long-term success. By focusing on environmental responsibility, social inclusion, and strong governance, businesses not only align with regulatory moves but seize opportunities tied to investor trust and stakeholder impact.
With Azali’s governance-driven approach to ESG, you can position your enterprise as responsible, resilient, and ready for ESG reporting standards and tomorrow’s challenges.
Let’s collaborate to make ESG your strategic advantage.
admin@azali.co.ke | +254 (0) 707 456 140