As environmental, social, and governance (ESG) and sustainability reporting become widespread across sectors in Kenya, concerns over the accuracy and verifiability of ESG numbers reported continue to rise.
More than ever, investors, customers, regulators, and the broader public, are demanding greater transparency and accountability.
While sustainability reporting has over the past few years gained significant traction, assurance and verification of the data being reported remains minimal. As such, and in some instances, such data has been questioned.
Such criticism includes the constant concerns over greenwashing (misrepresentation of facts and ESG credentials), greenhushing (withholding publication of ESG numbers), and greenwishing (making green commitments without a realistic plan or capacity to achieve them).
As a result, the focus is no longer just on the adoption of sustainable business practices and reporting on the various milestones. The sanctity of the sustainability disclosure is as good as what is being reported.
This introduces a new dimension to sustainability reporting—assurance. This involves companies seeking independent verification of their sustainability disclosures to ensure the credibility and reliability of the published data. We are seeing assurance become the new frontier in sustainability reporting.
Globally, organisations that have taken sustainability seriously are increasingly seeking third-party assurance, done by external auditors.
This is gaining prominence in Kenya too, a major milestone in the country’s sustainability ambitions.
Last month, we saw KCB Group set a new standard in the region by having its ESG disclosures in its 2023 Sustainability Report verified through limited assurance. KCB became the first bank and corporate entity in the region to have its ESG numbers independently assured by a third party.
The process of assuring ESG data is rigorous. It involves detailed checks on the methodology and claims in the report. In KCB’s case, this included assessments of the key performance indicators within the social and economic metrics.
Critics may argue that the assurance process adds unnecessary complexity and cost. However, this view overlooks the bigger picture. As investors and stakeholders increasingly evaluate companies based on ESG performance, the potential financial consequences of not having assurance of sustainability reports far outweigh the associated costs.
Companies that resist this shift risk reputational damage or reduced access to capital.
As Kenya and the greater Africa region continue to face significant environmental and social challenges, the demand for reliable ESG data will only grow. Companies that prioritise transparency in sustainability reporting will not only meet rising stakeholder expectations but also contribute to a more resilient, equitable future.
The challenge now is for organisations to continue raising the bar and reach full assurance soon. In the long run, this industry-wide shift will enhance transparency, accountability, and integrity in ESG disclosures across the region.
