The Capital Markets Authority (CMA) is set to audit environmental, social and governance (ESG) activity in the financial services sector amid a growing push for transparency and accountability.
Stakeholders concerned about climate change and social justice have stepped up a push for companies and regulators to make changes in the wake of record inflows to funds focused on ESG.
Consequently, many large firms, including those listed on the Nairobi Securities Exchange (NSE), are keen on improving their compliance with ESG which emphasises running profitable and sustainable business models without hurting the environment.
But amid this shift, there is global concern about greenwashing where some firms make false or misleading statements about the environmental benefits of a product or practice.
The capital market regulator said it will deploy a consultant to audit the state of ESG compliance and activity in the in the country.
“This assessment will serve as a crucial step towards enhancing transparency, accountability, and sustainable investment practices within the capital markets landscape in Kenya,” said CMA.
“The primary objective of this consultancy shall be to undertake a thorough ESG assessment within the capital markets sector in Kenya while recommending strategies for ensuring development and full adoption of progressive ESG guidelines for the Kenyan capital market,” it added.
Safaricom’s code of conduct, for instance, bars its suppliers from restrictive trade practices, offering bribes or gifts to any of the telco’s staff, hiring children, and paying workers below the minimum wage.
It also requires them to give their staff at least a day off a week and show evidence that they pay all taxes.
Another NSE firm, East African Breweries says in its latest sustainability report that it has now started screening its suppliers against human rights.
This is part of the brewer’s Know Your Business Partner Programme in which it says it assesses its business partners for potential economic sanctions and compliance risks such as bribery and corruption, money laundering, facilitation of tax evasion, data privacy or other reputational red flags.
