Article by Tyneketra Wanja
We do not inherit the earth from our ancestors, we borrow it from our children – American Proverb
Today, there is an increase in sustainability awareness among consumers as they choose to purchase products from companies that are looking into sustainable brands. With consumers demanding more than the usual financial reporting and a need to look at the non-financial performance of companies and corporations in environmental, social and governance aspects. The Institute of Certified Secretaries (ICS) in partnership with the University of Nairobi and the Capital Markets has recently pioneered its new course on ESG Frameworks. ESG is the Environmental, Social Governance Framework that is used to check the compliance of companies and corporations.
We were able to look into the global trends in the ESG arena with more jurisdictions around the globe like the European Union and United States of America legislating on mandatory disclosures and reporting of ESG compliance by companies and state corporations. They have moved away from requiring of it voluntarily like in our Country Kenya to making it part of their laws. New concepts were introduced such as materiality, double materiality, green washing, climate washing and green hushing. Interestingly, we were able to see that companies that forged ahead with ESG practices like a sustainability strategy looking into the people, performance, planet and purpose of the company were making greater profits than those that did not. ESG Compliance was seen to attract investment and more stakeholder engagement with a growing customer loyalty. In addition, consideration of sustainability has attracted incentives, grants and funding that helps grow the business while compliant to existing regulations, conserving the environment and impacting lives.
The United Nations 2023 Sustainable Development Report shows that the sustainable development goals are currently at 17% accomplishment. Companies and Corporations are embracing ESG frameworks not just as voluntary practices but mandatory will be one of the ways to increase our achievement of this goal. Awareness of the importance of embracing ESG practices will help in keeping companies accountable towards the achievement of our global goals. We were able to look into the climate risks and opportunities presented in practice, research, academia, litigation and business to adapt and mitigate climate change.
Technology has presented a new outlook on enhancing compliance to ESG frameworks. We looked into new opportunities presented by the use of Artificial Intelligence (AI) to facilitate data collection, real time and predictive data analysis, automated data integration and reporting. All this cannot be achieved without the finances and a look into environmental economic governance, trade in ESG and green finance helped open our minds to the responsibility and opportunity in investing in ESG frameworks.
The concept of ESG Frameworks is not a fleeting wave of ideology but is here to stay. The climate change crisis has necessitated us not only to preserve the planet and we the people through correct governance. ESG provides the platform to attain a sustainable future. Companies and State Corporations are then able to build public trust among their different stakeholders, build a reputation and enhance a long-term value and success.
