Which ESG frameworks actually matter for African businesses?
By Ethicial Business Team
Multiple international frameworks now compete for attention, each serving different purposes and stakeholder groups.
GRI remains the most comprehensive option. The Global Reporting Initiative takes a stakeholder-centric approach, designed to cover everything from environmental impacts to labour practices and community engagement. Companies using GRI report on issues that matter to employees, communities, NGOs, and investors alike. It’s the most widely adopted framework globally, making it valuable for companies seeking to communicate with diverse international audiences or attract foreign investment. GRI is recommended by the Nairobi Securities Exchange as the preferred framework for listed companies.
SASB targets investor materiality. The Sustainability Accounting Standards Board, born from American capital markets, focuses exclusively on financially material sustainability issues. For a Kenyan bank, that means data security and financial inclusion. For an agricultural company, it’s water management and land rights. SASB provides industry-specific standards tailored to different sectors, making reporting more focused but potentially less comprehensive from a stakeholder perspective.
IFRS Sustainability Standards are becoming the global baseline. The International Sustainability Standards Board released IFRS S1 (general sustainability-related disclosures) and IFRS S2 (climate-related disclosures) in June 2023, building on the foundations of SASB, the Task Force on Climate-related Financial Disclosures, and the Integrated Reporting Framework. These standards represent the most significant recent development in sustainability reporting.
In Kenya, the Institute of Certified Public Accountants of Kenya has established a phased adoption roadmap: voluntary implementation began in 2024, with mandatory compliance for public interest entities starting 1 January 2027, large non-public interest entities in 2028, and small and medium-sized enterprises in 2029. Across Africa, Nigeria has already embedded IFRS S1 and S2 into its regulatory framework, whilst Ghana, Tanzania, and Zambia are actively pursuing adoption. This convergence suggests that IFRS sustainability standards will increasingly become the expected baseline for investor-focused reporting across the continent.
The Integrated Reporting Framework offers a holistic approach. Originally developed by the International Integrated Reporting Council (now part of the IFRS Foundation following the 2022 consolidation), integrated reporting connects financial and non-financial information to show how an organisation creates value over time. South Africa’s Johannesburg Stock Exchange has required integrated reporting for listed companies since 2010, making it a continental pioneer. The Africa Integrated Reporting Committee, established by the Pan African Federation of Accountants, actively promotes this approach across African markets.
Kenya’s Regulatory Architecture
Kenya has developed a surprisingly robust sustainability reporting ecosystem over the past decade, with multiple regulators establishing requirements across different sectors.
The Nairobi Securities Exchange leads on listed company disclosure. In November 2021, the NSE published its ESG Disclosures Guidance Manual, recommending GRI Standards as the reporting framework. Listed companies had until November 2022 to comply with mandatory ESG disclosure requirements. This makes ESG reporting a legal obligation, not a voluntary exercise, for publicly traded Kenyan companies.
The Capital Markets Authority sets governance expectations. The CMA’s 2015 Code of Corporate Governance Practices for issuers of securities requires boards to adopt formal sustainability strategies and report on their implementation. This creates a governance framework that sits above specific reporting standards, ensuring board-level accountability for sustainability issues.
Banking regulators have moved decisively on climate risk. The Central Bank of Kenya issued Guidance on Climate-Related Risk Management in September 2022, with mandatory reporting requirements taking effect immediately. The Kenya Bankers Association subsequently launched a Climate-Related Financial Disclosures Template in September 2023 to help banks meet these obligations. The banking sector now faces some of the most specific and stringent sustainability reporting requirements in the Kenyan economy.
Sector-specific requirements create additional layers. Various industry regulators, from telecommunications to energy, have their own environmental and social requirements. The National Environment Management Authority enforces environmental impact assessment requirements. The Energy and Petroleum Regulatory Authority has renewable energy and environmental standards. Companies operating across multiple sectors often need to navigate several regulatory frameworks simultaneously.
African Regional Frameworks
Beyond national regulations, several pan-African initiatives shape the sustainability reporting landscape.
The African Peer Review Mechanism provides governance oversight. Established in 2003 under the African Union, APRM is a voluntary tool where 42 participating African states conduct peer reviews on governance, including corporate governance and sustainable development. Whilst primarily focused on national governance rather than corporate reporting, APRM reviews address environmental and social issues that influence how companies approach sustainability.
The UN Global Compact has significant African participation. More than 200 organisations in Kenya alone have signed onto the UN Global Compact, voluntarily committing to align their strategies with 10 principles covering human rights, labour, environment, and anti-corruption. Whilst not a reporting standard per se, Global Compact participation signals commitment to international sustainability norms and requires annual Communication on Progress reports.
IFC Performance Standards are widely referenced. The International Finance Corporation’s eight Performance Standards on Environmental and Social Sustainability are frequently built into financing agreements and referenced in Kenyan ESG frameworks. These standards cover assessment and management of environmental and social risks, labour conditions, resource efficiency, community health and safety, land acquisition, biodiversity conservation, indigenous peoples, and cultural heritage. They’re particularly relevant for companies seeking international financing or working with development finance institutions.
What Actually Works in Practice
The abundance of frameworks might suggest confusion, but in practice, a clear hierarchy emerges based on your business circumstances.
Start with mandatory local compliance. This is non-negotiable. If you’re listed on the NSE, you must comply with the ESG Disclosures Guidance Manual. If you’re a bank, you must meet CBK climate risk requirements. If you operate in a regulated sector, you must satisfy your sector regulator. Missing mandatory disclosures creates legal risk, damages relationships with regulators, and can result in enforcement action. Local requirements also tend to address issues that Kenyan stakeholders genuinely care about, from job creation to community development.
Prepare for IFRS S1 and S2 adoption. Even if mandatory compliance is years away for your company, the direction of travel is clear. Kenya’s 2027-2029 implementation timeline means public interest entities need to begin preparation now. Building the data collection systems, governance processes, and technical capabilities required for IFRS sustainability reporting takes time. Companies that wait until the compliance deadline will find themselves scrambling.
Layer international frameworks strategically. Beyond compliance, adopt additional frameworks only when they serve specific strategic purposes. If you’re seeking foreign investment, particularly from institutional investors, IFRS S1 and S2 are increasingly expected. If you’re part of international supply chains (exporting flowers to Europe, supplying minerals to global manufacturers), GRI reporting can satisfy demanding buyers. If you’re a subsidiary of a multinational, you’ll likely need to align with parent company reporting. If you’re applying for IFC or development bank financing, you’ll need to demonstrate alignment with IFC Performance Standards.
Consider your resource constraints carefully. Comprehensive sustainability reporting requires significant staff time, data management systems, external verification, and often consulting support. A small Kenyan enterprise struggling with basic regulatory compliance may find multiple international frameworks an expensive distraction that diverts resources from actual business operations. A large corporation with regional ambitions and international investors will find robust reporting essential for credibility and market access. The key is matching your reporting ambitions to your actual capabilities and stakeholder needs.
Avoid the multiple framework trap. Some companies attempt to simultaneously report using GRI, SASB, IFRS standards, and local requirements, believing this demonstrates commitment. In practice, it often produces reports so lengthy and complex that nobody reads them, duplicated data collection efforts, and confusion about which metrics genuinely matter for decision-making. Different frameworks serve different audiences. Use local standards for regulatory compliance. Use IFRS S1 and S2 (or SASB, which heavily influenced them) for investor communication. Use GRI when broad stakeholder groups demand comprehensive transparency. Don’t try to be everything to everyone.
The Convergence Story
The good news is that the fragmented landscape is consolidating, though the process will take years to complete fully.
The IFRS Foundation’s consolidation was pivotal. In 2022, the IFRS Foundation consolidated the Value Reporting Foundation (which included both the International Integrated Reporting Council and SASB) and established the International Sustainability Standards Board. This created institutional unity around investor-focused sustainability reporting. IFRS S1 and S2 incorporate concepts from integrated reporting, SASB’s materiality approach, and TCFD’s climate risk framework. Companies preparing for IFRS compliance are implicitly covering much of what SASB requires.
Regional adoption is accelerating. Nigeria’s early adoption of IFRS sustainability standards, Kenya’s clear implementation timeline, and active consideration in Ghana, Tanzania, and Zambia suggest African markets are coalescing around a common baseline. This is enormously beneficial for companies operating across multiple African markets, as it reduces the compliance burden of navigating completely different national frameworks.
GRI and IFRS are positioned as complementary. The Global Reporting Initiative and IFRS Foundation have clarified that their standards serve different purposes: GRI for broad stakeholder reporting on impact, IFRS for investor-focused reporting on enterprise value. Companies can use both, but should understand they’re addressing different audiences with different information needs.
Local requirements are adapting. Kenya’s embrace of IFRS sustainability standards through ICPAK, the NSE’s recommendation of GRI, and the CBK’s climate risk requirements show local regulators borrowing from and aligning with international best practice rather than creating entirely separate frameworks. This pragmatic approach reduces compliance burden whilst maintaining local regulatory sovereignty.
The Bottom Line
The question isn’t which framework is “better” in abstract terms. It’s which combination serves your specific circumstances, stakeholders, and strategic objectives.
A Kenyan company with purely domestic operations, local investors, and no international supply chain relationships has fundamentally different reporting needs than a company raising capital in London, exporting to sustainability-conscious European markets, or operating as part of a multinational group. The former should focus on NSE requirements, sector regulator compliance, and stakeholder issues that matter locally. The latter needs to prepare for IFRS S1 and S2, consider GRI for comprehensive stakeholder communication, and potentially address IFC Performance Standards if seeking development finance.
The smartest companies start with mandatory local compliance, build systems to collect reliable sustainability data, prepare proactively for IFRS S1 and S2 adoption rather than waiting for deadlines, and only then add voluntary international frameworks where they deliver clear value in terms of accessing capital, satisfying supply chain partners, or genuinely improving sustainability risk management.
The worst approach is adopting frameworks because they sound impressive or because competitors are doing it, without understanding the resources required, the data systems needed, or the audiences you’re actually trying to reach. Sustainability reporting done badly—incomplete data, inconsistent metrics, reports nobody reads—wastes money and damages credibility.
Good sustainability reporting isn’t about collecting badges from international frameworks. It’s about transparently communicating material information to the stakeholders your business depends on, using the standards those stakeholders actually pay attention to, and building internal systems that make sustainability performance genuinely manageable rather than just reportable.
By Staff Writer
