With Kenya and Nigeria adopting ISSB standards and mandatory deadlines looming, businesses must build systems, close data gaps, and prepare for compliance, or risk penalties, licence loss, and investor pullback.
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ESG reporting in Africa is evolving from a voluntary practice to a regulatory requirement, with firm deadlines approaching.
Countries such as Kenya and Nigeria have recently adopted the International Sustainability Standards Board (ISSB) standards, IFRS S1 and S2, with mandatory compliance expected by January 2027 and 2028 respectively.
Some companies have previously published sustainability information, but these efforts varied in scope. A 2024 KPMG report showed that 56% of top African companies engage in some form of sustainability reporting. However, many companies do not have or are still in the early stages of developing the internal systems and expertise needed to collect, measure, and disclose ESG data in line with global standards.
As the risk profile shifts, companies that delay action risk regulatory penalties, losing access to investments, and discovering too late that their systems can't meet reporting requirements.
Mandatory ESG-disclosure rules emerging
African countries are joining the global movement to standardise sustainability-related financial disclosures by adopting IFRS S1 which sets general requirements for sustainability-related financial disclosures, and IFRS S2, which focuses specifically on climate-related disclosures.
Nigeria
Nigeria has long had voluntary ESG disclosure frameworks, but the landscape shifted on 22 March 2024, when the Financial Reporting Council of Nigeria (FRC) confirmed that companies will be required to disclose eco-friendly practices and climate risk management in their financial reports as part of adoption of ISSB standards, IFRS S1 and S2.
Companies have until the end of 2027 to voluntarily comply. From January 2028, mandatory reporting begins for public interest entities and large companies, and in 2030, the rules extend to small businesses.
Kenya
Kenya is set to introduce mandatory sustainability reporting for public companies starting in 2027, but the groundwork for ESG reporting has been laid for years.
“While governments are now introducing laws and policies around ESG reporting, the principles behind ESG have long been practised by communities, small businesses, and informal sectors, well before formal frameworks were introduced,” says Agnes Gitau, Managing Partner at GBS Africa.
This is evident in the country’s Corporate Governance Code which has long encouraged companies to integrate ESG into their business culture. Several court cases involving multinationals also illustrate this point, for example, in 2018 a Kenya tribunal revoked a mining company’s licence for failing to conduct a mandatory Environmental Impact Assessment.
Sector-specific initiatives have also shaped ESG practices for years, with regulators and market institutions introducing practical tools and frameworks to guide companies toward structured ESG disclosure and risk management.
The Nairobi Securities Exchange (NSE), for example, created an ESG Disclosure Manual to help listed companies disclose information on governance practices, environmental and social risk management. While the Central Bank of Kenya (CBK), which requires banks to manage and report climate-related risks, released the Kenyan Green Finance Taxonomy and Climate Risk Disclosure Framework in April 2025. According to Gitau, these frameworks “provide a shared understanding of what qualifies as environmentally sustainable investment”.
South Africa
ESG reporting rules in South Africa remain largely voluntary, but the regulatory direction is clear. Under draft regulations to implement the Climate Change Act 2024, companies will be required to submit progress reports by 31 March each year, covering actual emissions, mitigation efforts, and outcomes.
The Johannesburg Stock Exchange (JSE) currently has voluntary ESG requirements for listed companies, which were aligned to ISSB standards in 2025. Meanwhile, the Financial Sector Conduct Authority (FSCA) released its Sustainable Finance Update 2025, in which it indicated that that mandatory climate-related disclosures for large, listed companies are likely on the horizon.
Barriers to mandatory reporting readiness
Companies across Africa face multiple barriers to ESG reporting readiness. Education and awareness remain low, leaving many unclear on standards.
Data gaps also makes it difficult to collect and verify information. A July 2025 poll by KPMG showed that disconnected or siloed data and manual data collection are the biggest challenges for sustainability reporting in West Africa.
Meanwhile, smaller companies and SMEs struggle to invest the financial resources and expertise in reporting.
Fragmentation across regulatory frameworks adds complexity, as businesses navigate differing national requirements alongside emerging global standards.
Some businesses may also consider ESG as a foreign imposition, but Gitau emphasises that “while these policy guidelines look like a reaction to global demand, they reflect values already present in communities.”
Key compliance tips for businesses
“Where businesses take it seriously, ESG can help them spot risks early, make better decisions, build stronger relationships with communities, and attract the kind of investors who are in it for the long term,” says Gitau.
This reframing matters as ESG reporting isn't just about compliance. “ESG reporting leads to sustainable ESG practices that have a positive effect on a company's bottom line, returns and employee welfare,” says Wairimu Karanja, Partner at Persistent.
Companies that view ESG as integral to their business strategy, rather than a reporting burden are better positioned to turn compliance into competitive advantage.
To stay ahead, companies can start reporting voluntarily, instead of waiting for mandatory deadlines.
Companies should further develop internal systems for data collection, this includes identifying what ESG data they currently track, where gaps exist, and what systems they need to capture information consistently going forward.
Establishing board-level accountability is also critical. Kenya’s Central Bank already requires bank boards to create climate risk strategies and assign clear roles. Even if a sector doesn’t yet have such mandates, setting up governance now, through board committees, executive ownership, or cross-functional working groups builds institutional muscle.
Companies should consider the broader ecosystem, including SMEs and informal businesses that lack formal ESG tools but bear the brunt of environmental and social risks. As Gitau notes, they may not have “the tools to measure their carbon footprint or issue sustainability reports, but they are often the first to feel the cost of environmental damage, social instability, and governance failures.” Supporting these actors through partnerships or capacity-building could strengthen resilience across the value chain.