By Dr. Kariuki Muigua, PhD (Leading Environmental Law Scholar, Policy Advisor, Natural Resources Lawyer and Dispute Resolution Expert from Kenya), Winner of Kenya’s ADR Practitioner of the Year 2021, ADR Publication of the Year 2021 and CIArb (Kenya) Lifetime Achievement Award 2021*
The Sustainability Manager (or even Chief Sustainability Officer/Sustainability Director in organisations that have set up the role/function) is the member of the management who is responsible for tactically leading the ESG reporting process in the organization. Ideally, this person is also the Head of Sustainability and is part of the senior management in the organization. The Sustainability Manager is the focal point and primary contact for the ESG reporting exercise and owns the reporting process, scope and timelines and is responsible for communicating progress to the executive team and to the CEO/project sponsor.
As a starting point and to kickstart the ESG reporting process, the Sustainability Manager should recruit ESG champions from across the organisation. This owes to the fact that ESG reporting is a multidisciplinary undertaking and, thus, the Sustainability Manager is expected to work with senior management to identify ESG champions from across the organisation. As per the NSE ESG Manual, the ideal scenario is that every department should be represented by a person with decision making ability. This person can delegate tactical responsibilities such as data collection to a member of their department. They however retain full accountability for information related to their department.
The second responsibility of the sustainability manager is to operationalise the management committee on ESG. The ESG Manual recommends that the management committee on ESG committee be chaired by the CEO and its membership is drawn from heads of department from across the organisation. Ideally, this committee should sit quarterly to discuss ESG related objectives, milestones and the ESG reporting process. The roles of the management committee on ESG should include setting the organisational ESG strategy in liaison with the Board and the CEO, ensuring the development of enabling polices and guidelines across the organisation to facilitate implementation of the ESG strategy and assessing how current ESG issues are likely to impact organisational performance, including monitoring ESG metrics and taking appropriate decisions.
In addition, the management committee on ESG is charged with monitoring and reviewing the impact to the organization of current trends, regulations and international standards on ESG. It is also the responsibility of the Committee to undertake engagement with other management committees to discuss cross cutting themes such as human rights and identification of ESG risks and opportunities. The Committee bears responsibility for making recommendations to the Board on ESG matters, including resourcing, ESG investments, and performance management. Finally, the management committee on ESG acts as a gate point in the ESG reporting process. The Sustainability Manager is responsible for coordinating the activities of the management committee on ESG to make sure it fulfils its mandate.
The Sustainability Manager also has the role of gathering and familiarizing the reporting team with the ESG reporting requirements and resources. In this regard, the Sustainability Manager should ensure that the reporting team has a clear understanding of the ESG reporting process. The ESG reporting team is expected to obtain and familiarize themselves with the key documents that form the basis of and provide guidance on sustainability reporting. These include organizational strategy document, stakeholder engagement guidelines (available from communications and investor relations teams), the CMA Code on Corporate Governance, the GRI Standards and ESG Disclosure Guidance Manual for Listed Entities in Kenya.
The Sustainability Manager and project sponsor (CEO) are also expected to raise awareness and to work towards obtaining sufficient buy-in from the executive team and the Board on the ESG reporting process. The ESG reporting team is tasked with raising awareness in their own areas of operation on the business and societal case for ESG integration and reporting. They are also responsible for working with the departmental heads to implement any initiatives and recommendations that are generated from the ESG reporting process. While various forms of ESG reporting could be mandated by policy and regulations, the best approach in seeking buy-in is to develop a quantified business case for ESG integration in the organization.
The Sustainability Manager is also bound to develop a project management plan that culminates in a published ESG report. The project management plan should contain, among others, the business and societal case for ESG integration and reporting, the ESG reporting process, the ESG reporting team (internal and external) and the reporting boundary and scope of material issues for reporting. The plan should also include the standard and framework identified for reporting – in this case, the GRI Standards. The plan also includes project timelines which should be same as financial reporting timelines for reporting companies, list of internal and external stakeholders that will be engaged in the reporting process, a communication plan, the budget allocation, key measures of success and project review, that is, an analysis of outcomes, lessons learnt and planning for the next reporting cycle.
Finally, the Sustainability Manager has the responsibility of conducting kick-off meetings for relevant stakeholders. In particular, the Sustainability Manager should facilitate kick-off meetings with internal and external stakeholders. The objective of the kick-off meeting is to familiarise stakeholders with the project management plan, important milestones in the ESG reporting process and to assign roles and responsibilities. External consultants and other identified external stakeholders e.g., publishing houses can be invited into the kick-off meetings. The Sustainability Manager will also use this opportunity to clarify any issues and set out expectations of all stakeholders involved in the reporting process.
*This article is part of an ongoing series on ESG (Environmental, Social and Governance) in Kenya by Dr. Kariuki Muigua, PhD, Kenya’s ADR Practitioner of the Year 2021 (Nairobi Legal Awards), ADR Publisher of the Year 2021 and ADR Lifetime Achievement Award 2021 (CIArb Kenya). Dr. Kariuki Muigua is a foremost Environmental Law and Natural Resources Lawyer and Scholar, Sustainable Development Advocate and Conflict Management Expert in Kenya. Dr. Kariuki Muigua is a Senior Lecturer of Environmental Law and Dispute resolution at the University of Nairobi School of Law and The Center for Advanced Studies in Environmental Law and Policy (CASELAP). He has published numerous books and articles on Environmental Law, Environmental Justice Conflict Management, Alternative Dispute Resolution and Sustainable Development. Dr. Muigua is also a Chartered Arbitrator, an Accredited Mediator, the Africa Trustee of the Chartered Institute of Arbitrators and the Managing Partner of Kariuki Muigua & Co. Advocates. Dr. Muigua is recognized as one of the leading lawyers and dispute resolution experts by the Chambers Global Guide 2022.
References
NSE, “ESG Disclosures Guidance Manual,” November 2021, p. 13-15; Available at: https://sseinitiative.org/wp-content/uploads/2021/12/NSE-ESG-Disclosures-Guidance.pdf(accessed on 10/02/2022).