Listed companies have been urged by the Nairobi Securities Exchange (NSE) to adopt sustainability reporting to enhance their profitability and attract investors.
Speaking during a deep-dive session of the 6th edition of the Absa Africa Financial Markets Index (AFMI) 2022, NSE Chief Executive Officer, Mr Geoffrey Odundo, said due to the impact of the climate action agenda, investors are increasingly looking for more information on Environmental, Social and Governance (ESG) compliance and asset allocation in listed companies.
“We have provided listed companies with an ESG compliance manual to guide them as they adopt regular sustainability reporting,” Mr Odundo said. “Embracing these measures enhances their overall investment profile.”
According to the report, Kenya ranked highest in the Market Transparency, Tax and Regulatory Environment pillar following the introduction of climate risk regulatory frameworks and ESG asset classes such as Green Bonds.
This comes on the back of regulations introduced in 2021 by the Central Bank of Kenya (CBK) requiring financial institutions to adopt climate risk guidelines to foster sustainable finance practices in the banking sector.
Absa Bank Kenya PLC’s Interim CEO, Yusuf Omari reported notable growth in the performance of the Absa collective investment schemes such as the Absa Gold Exchange Traded Funds (ETF), currently trading at an all-time Ksh2,000 per unit, as well as the Absa Unit Trust money market funds.
“We have also recorded the fastest growth in the collective investment scheme sector in the quarter ending June, hitting Ksh1.05 billion in assets under management from Ksh287 million in March,” says Mr Omari.
Capital Markets Authority (CMA) Director in charge of Regulatory Policy and Strategy, Mr Luke Ombara, said there has been significant revenue growth in pooled funds such as pension schemes which have risen to Ksh150 billion from Ksh48 billion as of June this year while hinting at future plans by the CMA to structure a diaspora bond to boost foreign exchange liquidity.
According to the index, Kenya recorded the highest growth in access to foreign exchange with an increase of 29 basis points, ranking fifth out of the 26 African countries that were assessed in this year’s AFMI report.
Overall, Kenya moved up two places to rank eighth, having scored 61 points up from 55 points in a similar period last year.