Is Your Business Ready for Kenya’s ESG Governance Reforms?

Kenya’s governance landscape is being reshaped by three reforms moving in parallel: the Capital Markets Authority’s new ESG Code for listed companies, the Central Bank of Kenya’s climate risk guidance for financial institutions, and the National Carbon Registry underpinning the country’s carbon markets. Individually, each reform targets a specific sector. Together, they signal a broader shift in what Kenyan regulators expect of business governance.

The Reforms Reshaping Kenya’s Governance Landscape

  • CMA ESG Code (draft approved July 2026): embeds ESG into board strategy, risk management and executive remuneration for listed companies, with mandatory provisions due within one year of gazettement.
  • CBK Guidance on Climate-Related Risk Management: requires banks to build board-approved climate risk strategies, governance structures and TCFD-aligned disclosures.
  • National Carbon Registry (launched February 2026): requires local registration of carbon projects, including those already certified under Gold Standard, Verra or Plan Vivo.

Readiness Checklist: Where Does Your Business Stand?

  • Does your board have documented oversight of ESG and climate risk, rather than leaving it to a single department?
  • Is executive remuneration linked to sustainability performance metrics?
  • Do you have a materiality assessment that is less than two years old?
  • Can you report against a recognised framework such as IFRS S1/S2, TCFD or GRI?
  • Do you have systems in place to capture GHG or financed emissions data?
  • Have your board and executive team received structured ESG capacity building?

If the answer to several of these is no, your organisation is not alone  but the window to close these gaps before mandatory deadlines is narrowing.

Common Gaps Businesses Are Facing

The most frequent gaps Lybra sees are fragmented ESG data spread across departments with no central ownership, limited board-level expertise to interpret ESG and climate risk information, unclear accountability for sustainability outcomes, and a reactive rather than strategic approach to regulatory change.

Building a Practical Roadmap

  • Phase 1: Gap assessment and materiality review against the applicable reform(s).
  • Phase 2: Governance and policy embedding, including board oversight structures.
  • Phase 3: Reporting systems, data collection and, where required, assurance.
  • Phase 4: Continuous monitoring and disclosure aligned to regulatory timelines.

 

Lybra helps businesses move through each phase, from Sustainability Reporting systems to board and executive Capacity Building.

Frequently Asked Questions

What happens if my business isn’t ready by the deadlines?

Consequences vary by reform, but generally include regulatory scrutiny, reputational risk with investors and lenders, and in the case of listed companies, the obligation to publicly explain non-compliance under the apply-and-explain model.

Do these reforms apply to private (non-listed) companies?

The CMA ESG Code applies specifically to listed issuers and the CBK Guidance to regulated financial institutions, but private companies in their supply chains, and those seeking investment or carbon market participation, are increasingly affected indirectly.

Where should I start if I haven’t begun?

Start with a gap assessment against the reform(s) relevant to your business, and prioritise board-level awareness before building out detailed reporting systems.

Not sure where your business stands? Contact Lybra for a readiness assessment.

This article is provided for general informational purposes only and does not constitute legal, financial, or professional advisory advice. While every effort has been made to ensure accuracy at the time of publication, regulatory frameworks and requirements referenced here may change. Organizations should seek tailored guidance from Lybra or a qualified professional before making decisions based on this content.