(Bloomberg) --

Kenya’s securities exchange has moved a step closer to requiring companies to start Environmental, Social and Governance, or ESG, disclosure and introducing an index for the category.

The Nairobi Securities Exchange published its ESG guidance manual on Monday, with a view of aligning information reported by companies listed in Kenya with international standards. The NSE and the East African nation’s Capital Markets Authority are in discussions to introduce an ESG index in future, according to a statement from the bourse.

“Listed companies have a grace period of one year from the issuance of the guidelines to interact and familiarize themselves with the ESG reporting steps,” according to the statement.

Markets around the world are quickly moving to provide information for a growing number of investors seeking assets that are compliant with sustainability norms, such as conserving nature and ensuring diversity. The NSE joins the few exchanges in Africa, including those in Egypt, Nigeria and Botswana, that have introduced ESG guidelines.

“Over time, and with improved maturity on ESG disclosures, stakeholders will be able to correlate financial performance with specific ESG indicators such as diversity and air emissions, as well as compare the ESG performance of organizations reporting within the same sector,” NSE Chief Executive Officer Geoffrey Odundo said in the statement.

The NSE has a market capitalization of 2.55 trillion shillings ($22.7 billion), with the largest companies including Safaricom Plc, KCB Group Plc and East African Breweries Plc already publishing annual sustainability reports. 

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