"ESG stands for Environmental, Social, and Governance. Investors are increasingly applying these non-financial factors as part of their analysis process to identify material risks and growth opportunities. ESG analysis has become an increasingly important part of the investment process. For investment professionals, a key motivation in the practice of considering ESG issues as part of their financial analysis is to gain a fuller understanding of the companies in which they invest." -CFA Institute.
The Federation of Kenya Employers (FKE) in partnership with the International Labour Organization (ILO), Bowman's law firm and Nairobi Security Exchange (NSE) held a webinar on ESG Reporting on the 21st of June 2022. The Senior Associate from Bowmans Law Firm, John Paul Ongeso, gave an overview of ESG Legal trends. He delved into the importance of ESG for MSMEs which included;
1. Investment- SMEs with a strong ESG focus may be better placed to attract investment, and thus grow their capital.
2.Financial Performance- Certain studies have linked ESG initiatives to larger financial returns. 3. Customer Management- Customers are beginning to focus more on whether SMEs, and their supply base, are meeting their sustainability goals.
4.SMEs and Large Corporations- SMEs often form part of larger companies’ value chains, and their ESG performance may impact the metrics of the larger corporations.
The Senior Officer of Corporate Affairs and Investor Relations at NSE, Wendy Boit, broke down the NSE’s new ESG disclosure guidance manual. The NSE is the fourth Exchange in Africa to launch an ESG Guidance manual having collaborated with the Global Reporting Initiative (GRI). Wendy explained that NSE aims at improving and standardizing ESG information reported by listed companies in Kenya. The manual guides companies on:
- Integration of ESG into strategy
- Identification of material ESG topics
- Measuring of materiality of ESG topics
- Reporting on ESG performance.
Gary Rynhart and Bruce Ravesloot from ILO outlined why firms of different sizes need to engage in the ESG agenda and how they can successfully do so. They stated that ESG ranked among the highest top three risk factors for businesses while noting that a great percentage of CEOs of large, medium and small-sized companies are aware of this fact but a small percentage do understand ESG and it’s nitty-gritties. According to a survey, a handful of companies have systems that allow them to effectively address and implement mitigations and response measures. This is the unfortunate reality, and that is why the Federation took the opportunity to organize a webinar as the first step to future trainings on ESG.
"ESG and its legal implications are for all companies including small companies not listed on stock exchanges. ESG legislation is increasing, and it has direct implications for smaller and medium sized companies. The bottom line is that if Kenyan enterprises want to access capital markets either locally or internationally or do business with these larger corporates, they will be subject to ESG screening." -FKE.
Click on the link below to watch the full webinar on ESG Reporting https://www.youtube.com/watch?v=k6hr4qt8xUg
FKE offers a wide variety of training, both virtual and physical across the year to build the capacity of your organizations. Kindly click on the link below to access the learning and development calendar for your planning and participation FKE Employers Academy 2022 Calendar.indd (fke-kenya.org)