Ways Kenya’s real estate sector can tap ESG opportunities

Since the Environmental, Social, and Governance (ESG) concept started taking shape, there have been various campaigns encouraging businesses globally to adopt more sustainable business practices, pushing them to shift their attention from product and service delivery to sustainability.

Despite ESG reporting not having gained much traction in Kenya, we are gradually incorporating it into company standards. The Kenya Companies Act of 2017 requires directors of companies to examine ESG matters that could impact the company's performance in the future.

There have also been various initiatives championing the ESG agenda, some specific to the real estate sector, like the Global ESG Benchmark for Real Assets (GRESB), which establishes standards for evaluating the ESG performance of real assets, including real estate, promoting global sustainability in the sector.

The Kenya National Climate Change Action Plan, International Finance Corporation (IFC) Performance Standards on Environmental and Social Sustainability, UN Sustainable Development Goals, and Global Reporting Initiatives Standards are also policies that businesses in Kenya can use as ESG benchmarks.

The real estate sector in Kenya can focus on the ESG pillars to drive sustainability enabling them to make an impact in the following ways:

First, by considering factors such as affordable housing, access to essential services such as hospitals and shopping centres, and environmental sustainability, real estate developers and investors can contribute to the long-term success and well-being of the communities they serve.

By investing in projects that tackle issues such as homelessness, healthcare accessibility, education, and job creation, developers become a powerful tool for positive change. Social impact in real estate presents an attractive opportunity for real estate companies to attract investors seeking both great financial returns and having a positive influence on society.

Secondly. the sector is a significant contributor to greenhouse gas emissions. To mitigate this impact, there is a growing emphasis on energy efficiency and green building practices. For developers seeking to apply ESG in their company strategies, the focus should be on addressing how to reduce harmful emissions that negatively impact the environment.

Building codes, certifications like LEED (Leadership in Energy and Environmental Design), and energy performance assessments are becoming key considerations in real estate development.

Lastly, real estate companies in Kenya should ensure the safety of employees and the general public during construction phases. As a major employer, they should be keen on the needs of their employees, both in the office and in the field, ensuring they cover issues such as diversity, executive pay, tax management, and business ethics.

An inclusive governance strategy coupled with regulatory compliance attracts investors therefore leading to the financial growth of a company.

In 2024, let us all consider not just making ESG a plan but an attainable goal. Let us impact our communities and environment one pillar at a time.

The writer is Safaricom Investment Co-operative Housing Unit Manager.