It is time for the Kenyan Competition Regime to incorporate ESG

Kenya has increasingly integrated environmental, social, and governance (ESG) factors into business decision-making, aligning with the Constitution of Kenya, 2010. Various legislations, such as the Environmental Management and Coordination Act, Climate Change Act, and Sustainable Waste Management Act, address environmental aspects. Social aspects are regulated by the Employment Act and the right to privacy is enforced by the Office of the Data Protection Commissioner. Governance aspects are outlined in the Companies Act. Consumers are shifting towards sustainable consumption habits, with 60% willing to pay more for eco-friendly products and 76% ready to boycott companies with poor ESG practices. Kenyan businesses, both private and public, are proactively incorporating ESG components into their operations. State corporations are guided by the Mwongozo Code of Corporate Governance, and listed companies are required to report their ESG performance annually. The question arises whether Kenya s competition law regime is flexible enough to accommodate these broader societal concerns. Various competition agencies worldwide have made competition laws more ESG-friendly. For instance, the European Union has revised guidelines to allow agreements among competitors pursuing sustainability objectives. To adapt competition policy, regulators must consider how competition law can support ESG considerations. Competition law should not hinder companies from collaborating on sustainability initiatives or sharing ESG performance information. Exemptions or guidelines should be considered if the partnership s key objective is enhancing production, distribution, or supporting economic or technical development with environmental benefits. Moreover, ESG should be considered as a parameter in merger assessments, as sustainability is a key consideration driving consumer habits and decisions. The competition regulator s decisions should also consider the impact on environmental and social aspects post-merger, while ensuring governance aspects are considered during decision-making. Ninette Mwarania, a Policy and Research Manager at the Competition Authority of Kenya, emphasizes the need for careful consideration of how competition law can be adapted to address the challenges and opportunities presented by mainstreaming ES

Source: capitalfm.co.ke
Published on 2024-09-24