ESG in Action Africa: A Year in Review
We are now well into January 2026, and yes, like every other year, ESG (Environmental, Social, and Governance) remains a core requirement for staying competitive, securing funding, and weathering our current-day disruptions.
Today, the real divide is not between companies with impressive-looking reports and those without. It is between those who can demonstrate genuine, verifiable progress and those who still rely mostly on words.
This moment calls for plain speaking rather than recycled checklists. For example, if 2024 was about debating terminology and 2025 was about scrambling for data, 2026 is the year of the audit. For any organisation looking to thrive this year, the focus must shift from how your ESG report looks to how your ESG data lives within your financial statements.
The Global Picture Today
Sustainability reporting continues to expand, though the pace and shape vary widely from one region to another. The ISSB standards (S1 for general disclosures and S2 for climate) have become the central reference for the most serious markets. China, for instance, began applying elements of its S2-aligned climate standard this month. The UK is close to finalising its own version. Several major Asian stock exchanges are now enforcing mandatory disclosures for listed companies. In Europe, regulators recently raised size thresholds and made certain detailed sector requirements optional, but the expectations from banks, investors, and large corporate buyers have not softened.
Physical climate risks have moved from forecasts into financial statements. Insurance costs are rising dramatically, supply lines are breaking more frequently because of heatwaves and floods, and shortages of critical raw materials are emerging as ecosystems degrade. Nature and biodiversity issues, once treated as secondary, are climbing onto board agendas. This shift is driven in part by the wider adoption of the Taskforce on Nature-related Financial Disclosures (TNFD) frameworks and by signals that ISSB may introduce incremental nature-related requirements before the end of 2026.
Just as in every other industry, AI tools have gone from disruptive to routine in ESG processes. They deliver quicker Scope 3 calculations, sharper risk projections, and more efficient checks. At the same time, boards are increasingly concerned about the energy demands of these AI models and about how social and human rights data are being collected and used.
Third-party assurance is now non-negotiable. Investors have largely stopped accepting self-reported figures at face value, so verification has become the baseline for credibility. Transition plans face the same level of scrutiny: broad net-zero statements garner little interest, whereas detailed plans with clear interim targets, visible progress, and realistic capital commitments are the ones that unlock funding and trust.
Without any iota of doubt, the most effective organisations no longer run ESG as a standalone function:
- They integrate materiality assessments directly into financial planning and forecasting.
- They maintain compact central teams to handle standards and oversight while embedding day-to-day responsibility across business units.
Above all, they concentrate effort on a small set of high-quality indicators that genuinely drive decisions rather than trying to measure everything.
What This Looks Like in Africa
Africa faces the same global pressures, but the climate impacts are more dangerous, the capital base is smaller, and the window for strategic positioning feels narrower. Even so, 2026 is already revealing concrete pathways for those who act with focus.
For example, South Africa remains the leader in sustainable finance structures on the continent. Kenya has publicly committed to mandatory ISSB-style reporting for public interest entities starting in January 2027, with voluntary adoption already underway this year. Nigeria is following a phased timeline that aims for full mandatory coverage by 2028. In an earlier article, we covered comprehensively what Nigerian businesses must do.
Interestingly, a growing number of other countries are quietly aligning their professional accounting standards and exchange listing rules in the same direction. Meanwhile, agricultural exports tell the clearest story of how quickly climate change turns into economic pressure.
In West Africa, the extreme heat of recent seasons (made far more likely by long-term trends) severely damaged cocoa, coffee, and tea yields, lowered quality, and drove prices to unexpected highs. Although partial recovery is expected this year thanks to improved weather in some Latin American regions, the deeper problems of ageing trees, spreading disease, and ongoing deforestation continue to threaten long-term production and regional stability.
On a positive note, the EU Carbon Border Adjustment Mechanism is now applying full charges to covered goods – steel, aluminium, cement, fertilisers, and electricity. African exporters in these categories face higher costs unless they can show meaningful reductions in embedded emissions. Continent-wide economic models suggest the overall GDP effect remains modest, but the impact on individual companies and sectors is already significant. On the other hand, businesses that invest in decarbonisation ahead of their peers can secure continued market access and potentially take share from slower-moving competitors.
On the flipside, climate finance reaching Africa remains small relative to the continent’s exposure, but credible disclosure is the key that opens larger flows. Investors keep repeating the same message: provide ISSB-aligned, verifiable data, and capital can move more quickly. Green, social, and sustainability bonds are expanding in South Africa and beginning to appear in other markets. Blended finance vehicles managed by development banks are also growing in scale. At the same time, frameworks such as AfCFTA offer a foundation for building more sustainable regional value chains.
What You Should Actually Do in 2026
We must say that long to-do lists are not helpful. However, concentrating on the handful of actions that consistently separate the strongest performers from everyone else:
- Carry out a straightforward materiality refresh that connects ESG factors directly to profit and loss, balance sheet strength, and cash flow. Eliminate everything that does not move the needle.
- Treat data as a serious priority. Create systems that generate consistent, auditable figures – especially for Scope 3 emissions and nature-related metrics – and begin assurance discussions early.
- Embed ESG into core governance structures. Ensure board-level oversight, integration with risk committees, and meaningful links to executive remuneration – not just another presentation slide.
- Produce a transition plan that people can actually believe in. Set specific interim targets, track real progress, and outline realistic capital expenditure. Let the year-on-year improvement in the numbers speak for itself.
- Actively pursue the financing that is genuinely available – green facilities, blended funds, sustainability-linked loans, and export credit arrangements tied to ESG performance. In Africa, stronger disclosure remains one of the fastest ways to unlock these sources.
- Convert CBAM exposure and other export risks into a commercial edge. Map the value chain thoroughly, target the highest-impact decarbonization steps, and turn those improvements into clear advantages in customer and partner discussions.
For smaller businesses, the logic stays the same, though the starting point is simpler: conduct a basic gap analysis using ISSB-lite guidance or UN SME tools, identify the single or two biggest risks (most often supply chain or energy), and develop one compelling, evidence-based narrative for funders and customers.
What’s next?
In short, 2026 rewards evidence over volume. The organisations that can show clearly and consistently that they are handling the risks that truly matter and capturing the opportunities that are actually present will come out ahead. In Africa the risks are sharper, but so is the potential reward for those who move with purpose and precision.
