We are at the tail end of 2021. It has been a challenging year. Countries and their citizens trying to adapt to live with Covid pandemic which continues to surge despite the good traction on vaccinations in many countries.
On top of coronavirus, climate change presents another dire challenge that requires massive mobilisation from the world to solve, and we are running out of time. Climate change, species loss, pandemics and massive natural disasters might define the future — unless we do something now.
Addressing the climate crisis necessitates large-scale efforts. 2021 can be categorised as the year of commitment where we saw several frameworks/platforms being put in place. The frameworks will shape the future of business in the coming years as we head for a healthier, more sustainable and more equitable world. Here are five topics that shaped 2021.
Climate change has resulted in increased frequency and magnitude of extreme weather events, impacting lives and livelihoods in significant ways. In recognition of the challenges presented by climate change to the Kenyan and the global economy, the Central Bank of Kenya (CBK) developed Guidance on Climate-Related Risk Management for the banking sector.
Climate change presents opportunities and risks to businesses and the management must look deeper into their organisational strategies to determine how to unlock the potential as well deal with the associated risks.
The guidelines aim to sensitise the banking sector on mitigation of climate-related risks and offer guidance on developing and implementing appropriate climate-related strategies and policies within banks.
Lenders are expected to fulfil certain conditions under the guidelines, enabling them to come closer to the mitigation and adaptation of climate change.
Nairobi Securities Exchange environmental, social and governance (ESG) disclosure guidance manual
The Nairobi Securities Exchange (NSE) #ticker:NSE has put Kenya on the sustainability proactivity map with the recent issuance of the Environmental, Social and Governance (ESG) Disclosure Guidance Manual.
The guidelines require that companies listed on the NSE publicly report on their ESG performance at least annually.
Furthermore, they have developed the manual to guide how to identify and measure material ESG topics, embed ESG into an organisation’s strategy, operations, and performance management, and how to report on ESG performance.
In the future, listed companies will be expected to deliver an integrated or stand-alone ESG/Sustainability annual report.
UN climate change conference of the parties (COP26)
The biggest climate conference was held in Glasgow, Scotland and concluded on 12 November 2021, resulting in a final agreement, dubbed the Glasgow Climate Pact, endorsed by nearly 200 countries. The pact presents a set of principles and goals for action on climate change and serves as a lever for international political pressure on climate change.
The Glasgow decision calls on countries to “revisit and strengthen” their 2030 targets by the end of 2022 to align them with the Paris Agreement’s temperature goals. It also asks all countries that have not yet done so to submit long-term strategies to 2050, aiming for a just transition to net-zero emissions around mid-century.
The Glasgow Climate Pact” highlights the need for a commitment to double adaptation finance and requests countries to present more ambitious climate pledges in 2022. The agreement resulted in the first-ever COP decision to explicitly target action against fossil fuels, calling for a “phasedown of unabated coal” and “phase-out” of “inefficient” fossil-fuel subsidies.
Indeed COP 26 decisions will shape corporate strategies for the years to come. Therefore, management and boards should appreciate the consequences, especially from their strategic perspectives.
Corporate commitment on climate change in Kenya (4C-KENYA)
The private sector is a crucial driver of the economy and, therefore, will need to increasingly play a more significant role in enhancing the country’s growth. Corporate leaders play an integral role in engaging on sustainable issues impacting their corporate bottom lines.
While a small number of corporates are contributing to global warming and GHG emissions, many companies are playing a vital role in embracing green technologies mitigating the impacts of climate change. Companies are investing in sustainable practices to enhance the triple bottom line of Planet, People and Economy.
More businesses realize that investing in sustainable practices is good for the economy and their bottom line.
Corporate leaders in Kenya made climate declarations through the Corporate Commitment on Climate Change in Kenya (4C-Kenya) initiative. The ten commitments signed during the conference align with the private sector's participation in the adaptation and mitigation of climate change.
As we look into 2022, much more is expected of the private sector especially the Kenyan private sector. The above four headlines provide a great starting point for companies to consider as they shape their future strategies. In addition, they provide platforms for mobilizing action that would result in significant opportunities for companies.
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