Two-thirds of listed firms reporting on sustainable practices

Nairobi Securities Exchange CEO Geoffrey Odundo. PHOTO | DIANA NGILA | NMG

By EDNA MWENDA More by this Author

Two-thirds of listed companies are reporting on environmental, social and governance (ESG) scores, a process which lagged one year after firms were required to disclose enforcement.

The number of listed companies has risen to 40 from 29 firms reported in December out of the 60 actively trading at the bourse.

The Nairobi Securities Exchange (NSE) chief executive officer Geoffrey Odundo said reporting on ESG was voluntary and companies had the choice of whether or not they complied.

“A total of 40 companies are already doing sustainability ESG reporting and it’s getting better and that’s why we said we want to encourage uptake because it’s the way to go,” said Mr Odundo. 

NSE issued guidelines in December 2021 requiring firms to announce how they deal with issues such as community, number of employees, corruption, customers’ data privacy and environmental impact.

The disclosures help investors and the public understand a company’s values beyond its financial performance.

“Very soon we will be doing ESG rating and we will tell you what percentage of your report is compliant, we want to have a market that has strong companies providing good value to the clients,” added Mr Odundo.

Company disclosures are expected to enhance transparency around listed firms and increase investment and profitability.

Some of the companies reporting on ESG at the bourse include Safaricom Plc, East African Breweries Plc (EABL), Bamburi Cement, KCB Group and British American Tobacco (BAT) among others.

Loise Wangui, the chief officer of regulatory affairs at the bourse, wrote in an Op-ed that companies demonstrating sustainable supply chains and good human rights records are less vulnerable to environmental shocks or reputational damage.

Investors in financial markets have increasingly sought information from firms on climate change action to assess their risks and pricing before investment.

Sustainability investing has gone mainstream, a trend expected to continue, and has been a driving force for ESG integration.

A report by S&P’s subsidiary IHS Markit, an information service provider, shows investors are looking for companies with an ESG policy in place, assignment of sustainable managers, corporate code of ethics, litigation, diversity and net employee composition.

Others include environmental policy, records on carbon footprint, data and cybersecurity incidents and health and safety events.