ESG reporting: New Year likely to see more companies disclose their Environmental, Social and Governance impacts

  • 13 Jan 2023
  • 4 Mins Read
  • 〜 by Chris Flowers

The year 2023 has started well for us with a great deal of interest in our recently published Environmental, Social and Governance (ESG) Report.

The growing interest by various players, many looking forward to learn from us, is a welcome development as ESG disclosure regulations are being enhanced around the world and locally, particularly for firms listed at the Nairobi Securities Exchange.

As a local business leader, I am passionate about the role of ESG Reports publishing and the critical analytical benefit they provide for social and economic re-engineering. I also don’t believe that anything in a complex or large business organisation can ever be perfect. Companies should always try and be on a journey of continuous learning, reflection and course correction when required. Today, businesses that strive to maintain responsible corporate citizenship standards are bound not only to track and measure their ESG impacts, but to also be transparent about them through public disclosures. Transparency in these disclosures is not easy as statistics can always be misinterpreted and however hard you try, a sentence in a report can always be taken out of context.

ESG is ultimately a framework upon which companies develop and deploy their sustainability initiatives, including identifying, assessing and managing risks that emanate from social and environmental issues within their entire value and supply chains.

As a university student in the early 1990s, the compulsory reading list included a book titled ‘Our Common Future’, perhaps the first book that put environmental issues and sustainable development firmly on the political agenda. Whilst I don’t profess to be an expert on the topic, the definition back then of ‘sustainable development’ was ‘Development that meets the needs of the present without compromising the ability of future generations to meet their own needs’. A worthy almost prophetic aspiration in 1987 when the author penned this and today an imperative!

At Kakuzi, this definition permeates through what we do. Long-term thinking and ensuring that resources are deployed holistically for the long term is essential to our business strategy which we believe, in turn, contributes to a broad spectrum of stakeholders. We have and we will continue to consistently track, measure and report our ESG impacts for public scrutiny. This is the right thing to do. Of course, we are not the first company to do this, as many other listed firms such as Safaricom, KCB, and others have publicly made similar disclosures. In time, other companies I’m sure will follow, especially as the NSE strengthens its guidelines and provides invaluable training on what these mean and how companies can comply. A progressive approach indeed.

As with any other new concept, it’s almost important that we as the consuming public scrutinise the detail of these reports and ensure we appraise ourselves of the complete picture. Headlines rarely tell the full story.

As reported upon, Kakuzi has faced some challenges in the recent past and has continued to respond to these as expected of a progressive, forward-thinking company. Kakuzi is one of the first companies in the region to put in place an Independent Human Rights Advisory committee combined with an independent operational-level grievance mechanism which we call SIKIKA.

Distinguished, eminent and independent legal professionals lead these two bodies, and in the spirit of transparency, the results of their work are publicly available. We believe in reaching the highest standards and are open to the challenges in trying to achieve this, even when faced with considerable headwinds.

In our third ESG Report – ‘Growing Communities, Responsible Value Chains’, released late last year, we have widely highlighted the value of deploying sensible, well-planned and sustainable irrigated agriculture. As part of our sustainability endeavours, we are harvesting as much water as possible during rainy seasons to mitigate challenges during drought seasons.

To use the word sustainable, we must also recognise that this means ‘sacrifice’. If Dams are to fill with water, they require large water catchment land areas. These areas must be conserved and managed to provide the water needed to fill the dams. Water catchment areas may appear like free open land and remain attractive for development, but that should be avoided. We must sacrifice this land to water catchments and not convert it for other uses.

Sustainability as I have mentioned also requires long-term thinking. As a nation known for excellence in long distance marathons, we are well placed to bring this philosophy to agriculture. Kakuzi began its commercial avocado operations in 1996 as a 200 ha trial! Today, we are shy of 1,000 ha. But the last 30 years have been with significant agricultural ups and downs. Keeping an eye on the long game is a must.

By far, sustainability is also about knowledge development, technology transfer and building farmers capacities. We constantly hear the call for farmers to embrace avocado or macadamia farming as the new green gold. This is indeed a laudable aspiration, but if we do not teach our farmers how to grow these crops to meet our consumers exacting demands, then we are in danger of failing.

Again this is a complex task, and it requires commitment from all actors in our sectors to recognise what is necessary for Kenya and Kenyan farmers to be a powerhouse of superfood production. We must be seen as a Country that can and does supply the region and the world with quality superfoods which are safe to eat and grown responsibly.

In my view, ESG reports need to be seen and consumed as critical business fundamentals review tools. They provide critical information for various stakeholders beyond the conventional profit and loss reports and if well done, also provide a rich outline of how business organisations are of course correcting their economic, social and governance touchpoints. It is the right thing to do.

The author is the Managing Director, Kakuzi Plc.