Why 2023 is likely to see better ESG reporting

Kakuzi MD Chris Flowers. [File, Standard]

The New Year has started well for us with a great deal of interest in our recently published Environmental, Social and Governance (ESG) Report.

The growing interest by various players, many looking forward to learning from us is a welcome development as ESG disclosure regulations are being enhanced globally and locally, particularly for listed firms at the Nairobi Securities Exchange (NSE).

As a local business leader, I am passionate about the role of ESG reports publishing and the analytical benefit they provide for social and economic re-engineering.

I also don't believe that anything in a complex or large business organisation can ever be perfect. Companies should always try and be on a journey of continuous learning, reflection and course correction when required.

Today, businesses that strive to maintain responsible corporate citizenship standards are bound not only to track and measure their ESG impacts but also to be transparent about them through public disclosures.

Transparency in these disclosures is not easy as statistics can always be misinterpreted, and however hard you try a sentence in a report can always be taken out of context. ESG is a framework upon which companies develop and deploy their sustainability initiatives, including identifying, assessing and managing risks that emanate from social and environmental issues within their entire value and supply chains.

As a university student in the early 1990's the compulsory reading list included the book 'Our Common Future', perhaps the first book that put environmental issues and sustainable development firmly on the political agenda.

Whilst I don't profess to be an expert on the topic, the definition back then of "sustainable development" was: "Development that meets the needs of the present without compromising the ability of future generations to meet their own needs."

A worthy almost prophetic aspiration in 1987 when the author penned this and today an imperative! At Kakuzi, this definition permeates through what we do.

Long-term thinking and ensuring that resources are deployed holistically for the long term is essential to our business strategy which we believe, in turn, contributes to a broad spectrum of stakeholders.

We have and will continue to consistently track, measure and report our ESG impacts for public scrutiny. This is the right thing to do. Of course, we are not the first company to do this, as many other listed firms, such as Safaricom, KCB, and others, have publicly made similar disclosures.

In time, other companies will follow, especially as the NSE strengthens its guidelines and provides invaluable training on what these mean and how companies can comply. A progressive approach indeed.

As with any other new concept, we as the consuming public must scrutinise the detail of these reports and ensure we appraise ourselves of the complete picture. Headlines rarely tell the full story.

As reported, Kakuzi has faced some challenges in the recent past and has continued to respond to these as expected of a progressive, forward-thinking company.

Kakuzi is one of the first firms in the region to put in place an Independent Human Rights Advisory committee, combined with an independent operational-level grievance mechanism, which we call SIKIKA.

Publicly available

Distinguished, eminent and independent legal professionals lead these two bodies, and in the spirit of transparency, the results of their work are publicly available.

In our third ESG Report - 'Growing Communities, Responsible Value Chains', released late last year, we highlighted the value of deploying sensible, planned and sustainable irrigated agriculture. As part of our sustainability endeavours, we are harvesting as much water as possible during rainy seasons to mitigate challenges during drought seasons.

To use the word sustainable, we must also recognise that this means "sacrifice." If dams are to fill with water, they require large water catchment land areas. These areas must be conserved and managed to provide the water for the dams.

As a nation known for excellence in long-distance marathons, we are well-placed to bring this philosophy to agriculture. Kakuzi began its commercial avocado operations in 1996 as a 200-ha trial! Today we are shy of 1,000 ha. ESG reports need to be seen and consumed as critical business fundamentals review tools.