It is no mean feat that Africa as a continent grew in the oneness of its people and the environment they coexisted with. Culturally, it was and still is innate in us to protect our environment and to share responsibility in doing so. So, whereas closer to home we may seem to be playing catch-up with the rest of the world, and even though ESG may sound like a boardroom buzzword, it is in fact at the very center of our continuing existence. From a Kenyan perspective, ESG compliance is still in its nascent stages, with regulatory authorities largely imposing requirements on listed or regulated entities. For the broader and more fragmented business world, however, the term and its intention often feel a little far removed.

So, what is ESG? Environmental, Social, and Governance — simply put — is a framework used to assess how a business impacts the environment, how it treats its people, and how it is governed. From a broader perspective, ESG is about the sustainability of profits. For decades, in the pursuit of economic prosperity, businesses created practices that were unsustainable for society and the environment. This led to early efforts to exclude harmful companies. Today, however, ESG focuses on businesses that intentionally integrate sustainability. This shift is driven by both consumers and investors, forcing businesses to align with global expectations if they are not already doing so.

Given its breadth, many stakeholders have sought to integrate the ESG concept into practice. One of the main drivers of ESG adoption is reporting. The International Sustainability Standards Board (ISSB) developed a global baseline for sustainability disclosures through two standards: IFRS S1, which requires companies to disclose sustainability-related risks and opportunities that may affect financial performance; and IFRS S2, which focuses on climate-related governance, strategy, risk management, and metrics. These standards emphasize financial materiality and help assess whether businesses can survive — and thrive — amid climate debates, social pressures, and heightened governance expectations.

In Kenya, ESG integration has been driven largely by regulators. The Capital Markets Authority (CMA) embeds ESG principles in its Corporate Governance Code and requires listed companies to prepare annual sustainability reports. The Nairobi Securities Exchange (NSE) has its own ESG Disclosure Guidance Manual, and the Central Bank of Kenya (CBK) promotes Sustainable Finance Principles, urging banks and financial institutions to integrate ESG into lending criteria. These regulatory shifts aim to position Kenya competitively and attract sustainable investment flows.

Private equity and private credit investors — key players in Kenya’s investment landscape — have also accelerated ESG uptake. For businesses looking to scale regionally or attract capital, ESG compliance is becoming essential. While some may view ESG as an additional cost burden, it can open new revenue streams. Kenya is active in the voluntary carbon market, where companies can leverage ESG-aligned practices to generate carbon credits and attract sustainability-driven buyers. To participate effectively, businesses must intentionally invest in compliance.

For ESG compliance to fuel business growth, companies will need strong partnerships with service providers, including auditors, lawyers, and ESG specialists. As Kenya’s regulatory landscape evolves, these professionals can guide companies through proper interpretation and implementation of new requirements. Over time, as more businesses adopt ESG, the resulting growth in data will empower stakeholders to make informed decisions and strengthen markets.

As ESG data matures, the true cost of sustainable business practices will become clearer. With Kenya’s ambition to commercialize the carbon credit market and foster national sustainability, businesses can play an active role by lobbying for incentives — including tax benefits — that balance sustainability and profitability. While ESG compliance may currently feel distant for many businesses, rising global pressures and shifting investor expectations mean it will soon become critical for survival, competitiveness, and growth. The businesses that act early will not only adapt; they will lead Kenya’s economic resilience and attract capital that uplifts the society and environment from which they rise.