Kenyan business can turn climate change law into huge gains
Kenya is this week entering fresh grounds in its fight against climate change with the launch of a sensitisation drive for a new law meant to protect the environment and improve corportae sustainability.
The Nairobi event will pave the way for implementation of the Climate Change Act, which is historic, considering that Kenya is the first country ever to enact a climate change law.
Viewed against the backdrop of the Paris agreement on climate change, this is a defining moment for Kenya that committed to cut its greenhouse gas emissions as part of the effort to minimise the effects of climate change.
The law, which came into force in May 2016, is aimed at making Kenya achieve its national goal of low-carbon, climate-resilient & sustainable development.
It offers a framework for public and private sectors to collaborate in the fight against climate change and is clear on what role each party will play.
In relation to the business community, it is clear that ‘business as usual’ is a thing of the past. The Act is clear on the role of business where it imposes climate change obligations on private entities.
The law stipulates that the National Climate Change Action Plan, which will be developed every five years, will recommend duties of public and private bodies on climate change.
Regulations will be put in place that will govern the nature and procedure for reporting on performance by private entities to be monitored by the National Environment Management Authority(Nema) including the authority to monitor and evaluate compliance.
Private companies are required to prepare reports on the status of their performance of the climate change duties.
The Act prescribes the period for reporting as well as requiring any private entity that fails to comply with its climate change obligations to prepare a report within a specified time.
The report will also highlight the actions that the private sector player has taken, is taking or intends to take to secure future performance with those duties. The short of this is that climate change action is now regulated and not voluntary.
The big question is whether this is a good move or a bad one for private companies. For the progressive companies, this is definitely an opportunity.
The law stipulates that national and county governments should provide incentives for private sector contribution to achieving low-carbon climate-resilient development. These incentives will be in the form of taxes and other allowances that will reduce the cost of doing business. Businesses in Kenya should focus on the bigger picture and not see the law as a problem.
They should focus on the triple bottom line where they will have to be deliberate on ensuring shared value to their shareholders though the consideration of people, planet and profit as the drivers of their activities.For those who have been on this journey, mainly the big corporations such as KCB, Safaricom and East African Breweries that have embedded corporate sustainability in their core activities, the benefits will be immense.
The list of benefits include reduced costs, increased brand reputation that should yield increased revenues and marketshare, not to mention the improvement in risk management and social license to operate.
With these efforts, the private sector will be involved in providing better livelihoods for the future generation but also reaping some benefits.
Research by the Investor Responsibility Research Centre Institute released in July confirmed that revenues from sustainable products are growing up to six times faster than ‘normal’ equivalents.
In the recent past, progressive companies have been issuing sustainability reports while the Act requires that companies will report to Nema on their climate change action.
This will require relevant tools and expertise to help companies to be able to report on their action. In the short run companies need to develop the relevant tools as well as reporting framework to ensure that you are in compliance with the requirement of the Act.
Globally, the private sector is engaging in the discussion and action for climate change. For instance, in the COP 21 in Paris, private sector was more involved and this expected to be repeated this November in COP 22 to be held in Marrakech.
Executives from industries as far ranging as cement, to technology and renewables have stepped up their efforts to address climate change, making pledges to decrease their carbon footprint, buy more renewable energy and engage in sustainable resource management.
On the other hand global financial institutions have pledged to make hundreds of billions of new investment over the next 15 years in sustainable products.
The private sector requires an enabling environment to be able to play game on issues of climate change.
This will be in the form of stable, long-term regulatory regimes, including a price on carbon to guide their companies through the transition to a low-carbon economy.