Business leaders who treat the ‘S’ in ESG conversations as less important and dwell more on emissions targets and reporting frameworks are taking a balance-sheet risk. In a climate of rising inequality, youth activism, tighter disclosure rules and shrinking donor funding, the biggest exposure may lie in the neglected ‘S.’
Companies that ignore social impacts risk losing their social licence to operate, and with it, access to markets, capital and talent. That was the core warning from speakers at the recently held 2026 Sustainability Landscape: What Kenyan Businesses Need to Know webinar, convened by Global Compact Network Kenya and Responsible Business Consulting. Insights from the speakers highlighted a shift that extends well beyond Kenya, given the key trends, risks and opportunities shaping the operating environment in Africa.
The thought-provoking conversation was enriched by perspectives from Susan Njoroge, managing director of Responsible Business Consulting, and Beth Knight, head of social sustainability at Lloyds Banking Group. Judy Njino, executive director at Global Compact Network Kenya, came in handy with her perspective on the importance of social licence.
Sustainability as enterprise risk
The session offered a candid and grounded exploration of the sustainability landscape facing businesses in Kenya and the wider region.
Njino emphasised the growing urgency of human development alongside economic growth, the rising expectations on business leadership to rebuild trust and social licence to operate, and the need to move sustainability from the margins of compliance into the core of business strategy and decision-making.
Key themes that emerged from the discussion included:
- The increasing materiality of environmental, social, and governance (ESG) considerations as board-level and financial issues.
- The implications of new sustainability and climate-related reporting requirements for businesses.
- The acceleration of circular economy and sustainable finance practices.
- The growing importance of collaboration and collective action in responding to converging social, environmental, and governance challenges.
Across these themes, the speakers agreed that sustainability is now a practical lens for managing risk, unlocking opportunity, and building resilient businesses in a rapidly changing environment.
Knight began by challenging companies to rethink how they frame sustainability. Addressing the impact of climate change on people, she said, is often “trying to fix the symptoms and not the causes”.
“We need to reach a point where we start focusing on systemic change by starting to think about what are those global risks that are happening as externalities to business and are destabilising the flow of capital around the world,” said Knight.
She asked business executives to look at sustainability and climate change as not a “message of doom and gloom” but a message of “Be wise!”
“Understand what is happening around you and figure out where the material impacts are that are impacting not just your business but your life, livelihood, family and the next generation and that behind us,” she said.
Knight asked business leaders to reflect on three lessons:
- Materiality beats marketing: Know what is material to the organisation so that you can get ahead of things before they happen to you.
- Social sustainability is not less important or junior to environmental sustainability: We need to give them equal attention.
- ESG is becoming a polarised term: Therefore, sustainability is a strategic framing and so we have to think about how to stitch all these into business strategies, and setting goals and outcome measures.
The human development lens
Njoroge agreed with Knight that social sustainability should not be perceived to be junior to environmental sustainability, asking business leaders to think about the urgency of human development and not just economic development.
She said it was encouraging to see developments in areas such as geothermal and solar energy taking centre stage as well as investments in electric vehicles—signs that new economic models are being built, and “not trapped in traditional fossil fuels.”
“But as this switch happens, we have to look at the people-centredness. It can’t be a GDP equation. It has to be a human development equation, and that ties to the point about youth and providing opportunities to them as we build these new economies,” said Njoroge.
Giving an example of the youth-led protests that rocked Kenya in 2024 and similar scenes in other countries in Africa, Njoroge said governance and leadership have become economic issues that masses are paying attention to and the private sector cannot afford to ignore this.
“It is important for us as private sector leaders to know that that there is a rooting and picking up of social activism. More citizens are beginning to ask: what is this company actually doing? How are they treating people? Are they respecting business and human rights?” she said.
Njoroge said that looking at the 2026 landscape, the expectation from the private sector to be more ethical and more responsible is going to play out more. She asked brands to remember that consumers are actually citizens first and they care a lot whether or not the business is helping in building the country.
Knight’s blunt advice to business executives is: “Don’t treat risk as content. Don’t treat sustainability as a marketing tool. Treat it as a design framework. Treat it as something that you have to be thinking about when you think about how to create value and legacy through the work that you are doing.”
She cautioned that the biggest risk in sustainability may be social and not environmental, asking executives to lead with people in the sustainability conversation and think about both the short-term and long-term implications.
Social risk in a changing funding landscape
Njino said Africa was experiencing a lot of social inequalities, compounded by weak safety nets, and this emphasises the need for businesses to not ignore the ‘S’ in ESG and think ‘E’ matters more.
Njoroge said 2025 witnessed a reduction in donor funding and the trend has spilled into 2026, with many non-governmental organisations finding it difficult to sustain social programmes. Governments are equally struggling to step up their budgets and fill the gap in areas such as education, healthcare, food and agriculture.
The ripple effect from the donor cuts, Njoroge explained, is that the public and societal expectations from private sector businesses is going to increase and only those who plug in will get the social licence to continue operating.
New disclosure rules are also raising the stakes. For countries like Kenya, where International Financial Reporting Standards (IFRS) S1 and S2—the inaugural standards or sustainability-related financial disclosures—are setting in, this will put more pressure on firms looking for investor confidence and public trust.
Njoroge said that with all indications pointing at the world missing the target to try and limit average global warming to safer levels, the climate impact on Africa is a real thing that should get business leaders thinking about operational resilience and continuity as well as disaster risk management.
Collaboration as a risk strategy
Knight stressed the need for collaboration when it comes to sustainability. “These are really difficult problems that we are confronting. They aren’t linear, and we can’t solve them alone. Therefore, the role of public-private partnership and working across nations is incredibly important.”
Njino said there have been shifts in the funding landscape that now place a lot of responsibility on countries that still largely depend on development finance to try and find alternative funds. She said the Global Compact comes in to try and provide practical pathways and solutions for the private sector to take action on a vast array of environmental, social and governance issues.
“We are operating in a context of converging crisis, whether political, social, economic, technological… all these issues are coming to the private sector and the business community at once,” said Njino, agreeing with Knight that collaboration is crucial.
“Part of the focus that we are advancing is around collective action and this is in line with the appreciation that no one company can provide the solution for the multiplicity of issues and challenges we are faced with.”
Maintaining focus on ESG
Tied to that, Njino said while there have been a lot of backlashes on ESG, sometimes leading to polarisation of leaders, businesses should “keep their eyes on the ball” and make sure they are doing their part to be able to provide solutions around the global challenges. She said it was crucial that businesses interrogate to what extent sustainability is delivering tangible value for people and for the planet.
“With the multiplicity of challenges, it is becoming increasingly clear that we have to move sustainability from fringes of compliance. We have to look at sustainability as a strategy and allocate it resources.”
Njino said past crises have shown that business that had kept sustainability “on the margins” emerged from such crises worse off than those that had sustainability “at the heart” of their operations. She advised business leaders to see sustainability and the integration of ESG as a risk management strategy.
“There is need to really move the needle. We need to see some level of action that is both accelerated and also unlocks partnerships at scale, breaking down the silos between the private sector, civil society and government,” she said.
Njino added that business leaders will have to stop taking the back seat on social and governance issues and gain the moral courage to be able to come forward and “start sticking their necks out” because if societies fail, businesses will not have the foundation upon which to grow and thrive.
The simple but uncomfortable takeaway from the webinar was that companies can no longer assume their social licence is permanent. In an era of rising citizen scrutiny and converging crises, trust has to be earned continuously.
Businesses that understand this and act on it will be the ones still standing when the next shock hits. For business leaders, the question is no longer whether to act, but how quickly they can integrate the ‘S’ into governance, capital allocation and risk management.
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