Connect with us

News & Analysis

Role of the CEO and Board in ESG Reporting in Kenya

Published

on

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 Nairobi Stock Exchange ESG Manual maps seven (7) key steps in ESG reporting to create an Annual ESG Report. These steps are setting governance structures, performing situation analysis, undertaking materiality analysis, developing value creation strategies, creating ESG report content, seeking internal and third-party assurance on ESG disclosure topics and publishing the ESG report. In the first place, the listed company has to create the requisite governance to oversee the ESG reporting. In essence, this entails the listed company obtaining the buy in from the Board and senior (executive) management on ESG reporting. An ESG committee of the Board may also need to be constituted and an ESG team appointed and resourced to undertake ESG reporting. The organization also needs to set the objective for ESG integration and reporting and appoint an ESG reporting team.

Good corporate governance practice now entails sustainability integration into business strategies. This is necessitated by the fact that ESG issues pose significant business continuity and long-term viability risks for the organisation. They also present significant opportunities for shareholder value creation. Hence, the Board and Senior Management has a responsibility to ensure that a process exists to identify, assess and manage ESG related risks and opportunities in the organization. However, the Board retains overall accountability for ESG performance and disclosure to stakeholders. The question is, thus, what is the role of the Board with regard to ESG reporting under the Manual.

As the representative of the shareholders and other stakeholders, the Board is expected to ensure that the long-term sustainability of the organization is assured and is demonstrated through senior management’s decisions on operational aspects of the business. In that regard, the Board holds the CEO and senior management to account on corporate sustainability performance as a fiduciary responsibility to stakeholders. There is elaborate legal and policy framework outlining the expected role of the Board with respect corporate sustainability, environmental management and social responsibility in Kenya. The legal framework includes the Constitution of Kenya, the Companies Act (No. 17 of 2015), Capital Markets Act (Cap 485a), the Environment Management and Coordination Act (No. 8 of 1999), the labour and employment laws, Bribery Act (No. 46 of 2016), Proceeds of Crime and Anti-Money Laundering Act (No. 9 of 2009) and Anti-Corruption and Economic Crimes Act (No. 3 of 2003) among others.

On its part, the Kenya Companies Act enjoin company directors to review environmental, social and community issues that may affect the future development, performance, and position of the company. With regard to policy and regulatory framework, the Code of Corporate Governance Practices for Issuers of Securities to the Public, 2015 requires companies to put in place environmental, social and governance (ESG) frameworks and proposes public disclosure of ESG performance in annual reports. The Mwongozo Code of Governance for State Corporations requires the Board to ensure that the strategy of the organisation is aligned to the long-term goals of the organization on sustainability so as not to compromise the ability of future generations to meet their own needs.

The Board is also expected to monitor the organisation’s performance and ensure sustainability. The ESG Manual requires Boards of Listed Companies, to facilitate integration of ESG into strategy, operations and performance management, to form a committee of the Board that oversees sustainability matters in the organisation, including the ESG reporting process. However, where a separate committee is not feasible, the ESG Manual allows the sustainability committee to sit within the strategy committee of the board but with clear ESG related terms of reference. In this regard, the ESG Manual directs boards needing additional guidance on the composition and functions of a sustainability committee to seek it in the Social and Ethics committee requirements for South African Companies. The Board is also expected to task the CEO to appoint and resource a focal point for sustainability within the organization who is referred to in the document as the Sustainability Manager.

On the other hand, the Chief Executive Officer (CEO) of the listed company is responsible for providing sponsorship for the ESG reporting process which includes appointing and resourcing the Sustainability Manager for the organization. To ensure ESG integration in the organisation, the ESG Manual requires CEO to routinely engage with internal and external stakeholders to assess needs and address concerns and assess materiality of ESG topics in the context of the business and its stakeholders. It is also the responsibility of the CEO to set policies and directives to guide management of material ESG issues. Further, the CEO is required to design ESG metrics and evaluate them as part of routine organizational performance management.

It is also the responsibility of the CEO to ensure a capacity building plan is in place to create awareness of current and emerging ESG topics and build competencies in ESG management. The CEO must also foster and embed a sustainability culture within the organisation by appointing and sufficiently resourcing the Sustainability Manager and developing and approving an annual ESG implementation plan for the organisation. The CEO also bears the responsibility of demonstrating consideration of ESG factors in strategic decision making, for example, in market entry, product design and recruitment decisions. The CEO is also tasked with disclosing ESG performance to stakeholders on an annual basis. S/he also chairs the management committee on ESG which the manual recommends should be composed of the CEO, the Sustainability Manager and heads of department from across the organization.

*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; Available at: https://sseinitiative.org/wp-content/uploads/2021/12/NSE-ESG-Disclosures-Guidance.pdf(accessed on 04/06/2022).

News & Analysis

Why is THE LAWYER AFRICA Listing Top Law Firms and Top Lawyers?

Published

on

By

The Litigation Hall of Fame | Kenya in 2023 (The Most Distinguished 50 Litigation Lawyers in Kenya).

We live in the age of information overload where too much information (TMI) is increasingly making it difficult to find actionable legal data about a good law firm or lawyer. At the same time, legal services are increasingly going digital and finding your next lawyer is a now a matter of a few clicks. Many existing, new and potential clients are interested to know more about the lawyer handling or likely to handle their next case or transaction as every HR Manager seeks to know how their In-house Lawyer or next hire compares to peers.

The biggest dilemma especially for commercial consumers of legal services  is where to begin the journey in finding the law firm or the lawyer to meet their immediate legal need created by their new venture,  business, transaction or dispute. In-house counsel are also called upon to justify opting for one lawyer or law firm or over the other.  Hence, the rise in the popularity of international law directories rankings as an attempt to fill the yawning gap by listing a few dozen lawyers and law firms in esoteric categories that often don’t align with the legal needs of the domestic legal market.

But ranking two dozen elite lawyers or big law firms in a big jurisdiction like Kenya there are over 20,000 lawyers is merely a drop in the ocean. The result is the same candidates are listed year after year and an In-house Legal Team looking to infuse new blood in their external counsel panel is left very little discretion. At best, International legal ranking only succeed to tilt the scales in favour of few big firms and their lawyers and to aid the choice of International Legal buyers who are constrained for time in picking their External Counsel in jurisdictions where they cannot find referrals.

The questions that beg are: What about the other top law firms and lawyers who are equally good if not better but don’t have the time to fill the technical paperwork that comes with International Legal Directories rankings? What about Domestic Legal Buyers who simply want to justify why they prefer a lawyer or law firm not listed in the International Directory? Can increasing the number of listed lawyers or law firms from less 0.1% of the profession (as captured by International Law Directories) to at least 1% of the profession or higher for those specializing in the practice area help in enhancing access to justice in Africa? Can ranking law firms by number of fee earners help in the quest for a more accurate bird’s eye view of a country’s legal landscape?

At THE LAWYER AFRICA, we have set out to list Top Law Firms and Top Lawyers in the various practice areas in a way that democratizes law rankings and listings and brings this essential value add within reach of most lawyers and every law firms doing top legal work. We don’t promise to list all the top lawyers or law firms, but we commit to make sure every lawyer or law firm we list is at the top of the game in the listed practice area. We aim to help both little known and already known law firms and lawyers doing top legal work in their area of specialization get discovered by discerning clients and possibly get more opportunities to do great work.

THE LAWYER AFRICA is looking to list up to Top 200 Law Firms in every African Jurisdiction based on their reputation and number of fee earners headcount with a goal of listing at least Africa’s Top 1,000 Law Firms which are leaders in their respective countries. We also seek to list up to Top 1,000 Lawyers in every country in Africa in at least five main practice areas, namely, Litigation, Commercial Law, Property law, In-house and Private Sector or more.

THE LAWYER AFRICA categorizes law firms in large jurisdictions as Top 5, Top 10, Top 20, Top 50 and Top 100 (and allow tying where number of counsel is equal). The Top Lawyers are listed in three categories, namely, Hall of Fame (the Distinguished Top 50 or 75 Practitioners in a Practice Area), Top 100 (the Leading Top 100 Practitioners in a Practice Area) and Up-and-Coming (the promising Top 50 or 75 Practitioners in a Practice Area).  The placing of a listings depends on a number of key factors including the number of key matters or transactions handled, years in practice and experience, size of team working under a counsel, reputation and opinion of peers (where available) as established by THE LAWYER AFRICA.

THE LAWYER AFRICA prefers to list a counsel in only one listing, as far as possible. The Team tries (as far as possible) not to contact listed law firms or lawyers before the listing is finalized in the first. However, a listed law firm or lawyer may be contacted at the pre-launch stage of a list for purposes of selling merchandise relating to the launch but such engagement will not affect the listing. In case of future listings, it is expected that interested lawyers or law firms who feel they were previously left out of the list may to provide information for consideration to determine if they qualify for the next listing but that will not guarantee any listing.

THE LAWYER AFRICA undertakes not to charge for listing any lawyer or law firm. However, upon publication of a listing, as part of recovering the sunk costs we incur in the research and publication of the listings, we shall charge a token for printing and shipping of Quality A3 Certificate for listed Law Firms and/or A4 Certificate for listed Lawyers who wish to have or display the branded souvenirs or to use our proprietary digital materials in their business  branding. We may also charge listed and unlisted law firms and lawyers an affordable fee for limited banner advertising or publishing of enhanced profiles next to the listings.

For any question or feedback on any list or listing, feel free to contact THE LAWYER AFRICA PUBLISHER at info[at]thelawyer[dot]africa.

Continue Reading

News & Analysis

The Roles of the Three Parts of the Permanent Court of Arbitration

Published

on

By

H.E. Amb. Marcin Czepelak, the Fourteenth Secretary-General of the Permanent Court of Arbitration (PCA)

Continue Reading

News & Analysis

Brief History of the Permanent Court of Arbitration (PCA)

Published

on

By

By Dr. Kariuki Muigua, PhD, C.Arb, Current Member of Permanent Court of Arbitration (PCA) Representing the Republic of Kenya.

The Permanent Court of Arbitration (PCA) is a 124 Years Old Intergovernmental Organization currently with 122 contracting states. It was established at the turn of 20th Century during the first Hague Peace Conference held between 18th May and 29th July 1899. The conference was an initiative of then Russian Czar Nicholas II to discuss peace and disarmament and specifically with the object of “seeking the most effective means of ensuring to all peoples the benefits of a real and lasting peace, and, above all, of limiting the progressive development of existing armaments.” The culmination of the conference was the adoption of a Convention on the Pacific Settlement of International Disputes, which dealt not only with arbitration but also with other methods of pacific settlement, such as good offices and mediation.

The aim of the conference was to “strengthen systems of international dispute resolution” especially international arbitration which in the last century had proven effective for the purpose with number of successful international arbitrations being concluded among Nations. The Alabama arbitration of 1871-1872 between the United Kingdom (UK) and the United States (US) under the Treaty of Washington of 1871 culminating in the arbitral tribunal’s award that the UK pay the US compensation for breach of neutrality during American Civil War which it did had demonstrated the effectiveness of arbitration in settling of international disputes and piqued interest of many practitioners in it as a mode of dispute resolution during the latter years of the nineteenth century.

The Institut de Droit International adopted a code of procedure for arbitration in 1875 to answer the need for a general law of arbitration governing for countries and parties wishing to have recourse to international arbitration. The growth of arbitration as a mode of international dispute resolution formed the background of the 1899 conference and informed its most enduring achievement, namely, the establishment of the PCA as the first global mechanism for the settlement of disputes between states. Article 16 of the 1899 Convention recognized that “in questions of a legal nature, and especially in the interpretation or application of International Conventions” arbitration is the “most effective, and at the same time the most equitable, means of settling disputes which diplomacy has failed to settle.”

In turn, the 1899 Convention provided for the creation of permanent machinery to enable the setting up of arbitral tribunals as necessary and to facilitate their work under the auspices of the institution it named as the Permanent Court of Arbitration (PCA). In particular, Article 20 of the 1899 Convention stated that “[w]ith the object of facilitating an immediate recourse to arbitration for international differences which it has not been possible to settle by diplomacy, the signatory Powers undertake to organize a Permanent Court of Arbitration, accessible at all times and operating, unless otherwise stipulated by the parties, in accordance with the rules of procedure inserted in the present Convention.” In effect, the Convention set up a permanent system of international arbitration and institutionalized the law and practice of arbitration in a definite and acceptable way.

As a result, the Permanent Court of Arbitration (PCA) was established in 1900 and began operating in 1902. The PCA as established consisted of a panel of jurists designated by each country acceding to the Convention with each country being entitled to designate up to four from among whom the members of each arbitral tribunal might be chosen. In addition, the Convention created a permanent Bureau, located in The Hague, with functions similar to those of a court registry or secretariat. The 1899 Convention also laid down a set of rules of procedure to govern the conduct of arbitrations under the PCA framework.

The second Hague Peace Conference in 1907 saw a revision of the 1899 Convention and improvement of the rules governing arbitral proceedings. Today, the PCA has developed into a modern, multi-faceted arbitral institution perfectly situated to meet the evolving dispute resolution needs of the international community. The Permanent Court of Arbitration has also diversified its service offering alongside those contemplated by the Conventions. For instance, today the International Bureau of the Permanent Court of Arbitration serves as a registry in important international arbitrations. In 1993, the Permanent Court of Arbitration adopted new “Optional Rules for Arbitrating Disputes between Two Parties of Which Only One Is a State” and, in 2001, “Optional Rules for Arbitration of Disputes Relating to Natural Resources and/or the Environment”.

Reference

PCA Website: https://pca-cpa.org/en/about/introduction/history/ (accessed on 25th May 2023).

Continue Reading

Trending