All companies listed on the Nairobi Securities Exchange (NSE) will be required by law to publish sustainability disclosures aligned with global standards starting 1 January 2027, as Kenya enters the final phase of its reporting roadmap.
The requirement is anchored on two linked frameworks to be released alongside audited financial statements. IFRS S1 compels firms to outline how sustainability-related risks and opportunities affect business value, cash flow and cost of capital, while IFRS S2 mandates disclosure of Scope 1, 2 and 3 emissions.
This obligation extends beyond listed firms to a wider group of Public Interest Entities, including banks, insurers, pension schemes, fund managers regulated by the Capital Markets Authority, and deposit-taking SACCOs.
In a joint advisory issued this month, the NSE and ICPAK directed all listed companies to submit a Sustainability Reporting Readiness Assessment by 30 June 2026. The report must address governance oversight, integration into strategy, risk management frameworks, and emissions tracking systems. Firms are also required to appoint an independent assurance provider within the same timeline.
Assurance requirements will be introduced in phases, beginning with limited assurance in 2028, progressing to reasonable assurance excluding Scope 3 emissions in 2029, and culminating in full reasonable assurance by 2030.
Uptake has so far been slow since voluntary adoption opened in January 2024. KCB Group remains the only listed financial institution confirmed to have issued an IFRS S1 and S2-compliant sustainability report with limited assurance by Deloitte. No other major bank or large-cap firm has publicly demonstrated similar readiness.
The standards also raise the bar significantly. Under IFRS S1, companies must go beyond standalone ESG narratives and clearly show how sustainability risks influence financial decisions, capital allocation and forward-looking assumptions reflected in audited accounts.
This shift comes even as corporate governance scores among listed firms hit record highs. NSE companies recorded a 78.88% score on the CMA’s 2024/2025 governance index, reaching Leadership Rating for only the second time since assessments began. All seven governance principles achieved top-tier ratings simultaneously, with the banking sector leading at 90.30%, while agriculture lagged behind.
Despite this progress, gaps remain. Regulators have flagged shortcomings such as failure by some firms to document mandatory director training hours. The new sustainability standards demand far more, including measurable emissions data, auditable systems, and stronger data governance structures.
Investor expectations are also shifting, with nearly 40% of foreign investors now factoring ESG compliance into their investment decisions.
