- Companies on the continent must stop talking about CSR and instead look at the world through the prism of ESG (Environmental, Social and Governance).
- ESG ratings can cause a stock’s price to fluctuate and attract investors, which is why they have become a priority for CEOs around the world.
- Having a clear ESG strategy also gives a brand or company a motivating and inspiring goal.
The announced agreement between Kenya and the UK to boost investment in Nairobi is an opportunity to showcase leading African investment opportunities that deliver strong financial, social and environmental returns.
When it comes to having a goal, African businesses are one step ahead of global companies and brands outside of the continent, which are only now finding their inner Samaritan and talking about their purpose in life.
Long before any goal other than making money was fashionable, African companies and brands were very much aware of the importance of their social and business goal, and their power to transform lives and entire savings.
Products and services can change the lives of people on the continent just like they don’t elsewhere. For example, affordable digital payment products can make the difference between surviving and thriving for a small farmer; low cost off-grid solar power could allow a family to more than double their income because they can extend their working day; or a child can study in the evening leading to better qualifications.
Keeping mobile networks running throughout political turmoil or natural disasters can support the democratic process or even save lives during crises triggered by climate change such as floods, fires or famine.
However, despite being ahead of their target, African businesses are lagging behind when it comes to informing investors of the company’s positive actions.
Businesses always speak in terms of corporate social responsibility (CSR), something separate and additional rather than the primary focus of what a business does and how it behaves. This continues across the continent, long after CSR was abandoned as an outdated and inadequate model by companies in the United States and Europe.
Companies on the continent must stop talking about CSR and instead look at the world through the prism of ESG (Environmental, Social and Governance). Not only is this a more contemporary and authentic way of running your business, investors and consumers now judge and reward companies on their ESG score, rather than on their “good jobs” on CSR.
ESG ratings can move a stock’s price and attract investors, which is why they have become a priority for CEOs around the world. African CEOs and boards are slowly waking up to the new ESG agenda, but too many of them are still clinging to the world of CSR, a world that is simpler and more comfortable but offers a low return on investment. Having a clear ESG strategy also gives a brand or company a motivating and inspiring goal.
This global rise of business as a force for good is good news for Africa, which bears the brunt of so many global challenges disproportionately.
For example, a recent study by the global safety charity Lloyd’s Register Foundation showed that farming is not just one of the most dangerous jobs in the world. Another example is climate change, where the rise of green finance initiatives will boost economic development but also build resilience.
Companies that effectively communicate their ESG credentials will attract a large portion of new investment in Kenya.
Chris Genasi, President, Hudson Sandler Africa