Capital Markets

NSE unveils rules on social impact reporting for firms

nse

Nairobi Securities Exchange trading floor. PHOTO | NMG

BDgeneric_logo

Summary

  • The Nairobi Securities Exchange (NSE) has issued Environmental, Social and Governance (ESG) guidelines for the listed firms.
  • Firms have traditionally limited themselves to making financial disclosures in their annual reports, but investors are increasingly keen on learning how the companies are impacting on the environment and the wider society.
  • The disclosures are expected to enhance transparency around listed firms, helping unlock new investments, especially from international investors.

Listed companies will now publish annual sustainability reports that show investors how they deal with issues such as corruption, customers’ data privacy and environmental impact.

The Nairobi Securities Exchange (NSE) #ticker:NSE has issued Environmental, Social and Governance (ESG) guidelines for the listed firms in partnership with Global Reporting Initiative (GRI). The NSE is the fourth stock exchange in Africa to launch an ESG Guidance manual.

Firms have traditionally limited themselves to making financial disclosures in their annual reports, but investors are increasingly keen on learning how the companies are impacting on the environment and the wider society, corporate governance practices and fraud mitigation.

The ESG reporting will be integrated into the normal annual reports or in separate sustainability reports. Listed companies will have a grace period of one year to familiarise themselves with the new guidelines before commencing reporting.

The disclosures are expected to enhance transparency around listed firms, helping unlock new investments, especially from international investors.

“The NSE Guidelines will require listed companies to report publicly, at least annually, on their ESG performance through an integrated report or a separate sustainability report. This is intended to encourage uniformity in ESG disclosures even as a comprehensive ESG legal framework is awaited,” said the NSE in a statement yesterday.

“NSE’s decision to support companies by issuing guidelines for reporting on ESG matters is a proactive step towards supporting listed companies attract more foreign and domestic capital in the future.”

Some listed firms, notably Safaricom #ticker:SCOM, EABL #ticker:EABL and KCB #ticker:KCB already publish annual sustainability reports which show their wider impact on society, ranging from the contribution to the country’s GDP, how they handle fraud or corruption cases and the measures they have taken to protect the environment.

“Our sustainability agenda goes beyond compliance to government regulations; it is a commitment from every function in our business to be a responsible corporate citizen and hold ourselves accountable to the communities we operate in,” said EABL managing director Jane Karuku during the launch of the guidelines yesterday.

Other areas of reporting include gender balance in the workplace and outlining their efforts to offer equal opportunity with people living with disability.

[email protected]