CMA encourages use of technology to enhance ESG data collection and reporting in the capital markets
Nairobi, 21 December 2023…The Capital Markets Authority (CMA) has expressed support for the adoption of technology in ESG data collection to enhance transparency in ESG reporting. This is aligned to CMA’s ambition of leveraging technology to enhance efficiency of the capital markets value chain.
The CMA Chairman, Mr. Ugas Mohamed, observed that enhancing the efficiency of ESG data collection using technologies such as Artificial Intelligence (AI) in capital markets is a significant milestone. ESG factors have become key considerations for investors seeking sustainable and socially responsible investment opportunities.
Mr. Mohamed said, ‘’ESG reporting frameworks are key to support corporate disclosure on sustainability and ethical performance of their business operations. These frameworks offer a structured approach to evaluating a company’s practices and ESG-related business risks and opportunities, including impact on the environment and society’’.
The importance of AI-driven ESG data collection tools was highlighted during the recent African Stock Exchanges Association (ASEA) conference held in Nairobi, 22-24 November 2023.
The Nairobi Securities Exchange (NSE) is working with listed companies on the adoption of ESG frameworks for listed companies. ESG reporting is voluntary for listed companies in Kenya with twenty-nine companies having adopted the practice so far.
With the growing adoption of enhanced ESG reporting globally, more Kenyan listed companies are expected to come on board as this is emerging as a key consideration for investors. ESG reporting is mandatory in some jurisdictions such as in China, Malaysia, UK, and the EU, with disclosure requirements stipulated in law. During the COP28 meeting, the importance of mitigation measures to address the impact of climate change was underscored due to the growing concerns at a global level.
NSE plans to introduce an index to measure disclosures and performance on climate change action including carbon gas emissions by listed companies, which is expected to lead to increased uptake of ESG reporting.
CMA also welcomed the publication of standards for Sustainability-related Financial Information (IFRS S1) and Climate-related (IFRS S2) Disclosures by the International Sustainability Standards Board (ISSB), which have set globally acceptable benchmarks in reporting.
The Capital Markets Authority (CMA) was set up in 1989 as a statutory agency under the Capital Markets Act Cap 485A. It is charged with the prime responsibility of both regulating and developing an orderly, fair, and efficient capital markets in Kenya with the view to promoting market integrity and investor confidence. CMA also regulates the commodity markets and online forex trading. The regulatory functions of the Authority as provided by the Act and the regulations include; Licensing and supervising all the capital market intermediaries; Ensuring compliance with the legal and regulatory framework by all market participants; Regulating public offers of securities, such as equities and bonds & the issuance of other capital market products such as collective investment schemes; Promoting market development through research on new products and services; Reviewing the legal framework to respond to market dynamics; Promoting investor education and public awareness; and Protecting investors’ interest. For more information, please contact: Antony Mwangi, Manager Corporate Affairs & International Relations on email@example.com