Across East Africa, increasingly more companies are embracing sustainability reporting, driven by growing pressure from regulators, investors, and other stakeholders. Companies are increasingly expected to move beyond financial metrics by integrating Environmental, Social and Governance (ESG) performance into operations, strategy, and reporting. In East Africa, regulators have mandated sustainability reporting requirements aligned with global frameworks, most notably the International Sustainability Standards Board (ISSB) standards, which have gained widespread endorsement across the region.
Several East African countries have established ISSB adoption roadmaps, with Tanzania among the nations leading the way in adoption beginning in the financial year starting January 2025. As deadlines approach, many companies face implementation challenges including limited budgets, incomplete data, resource constraints, and the complexity of the reporting standards.
Beyond these challenges, we are also seeing several prevailing myths that contribute to confusion about the purpose and value of sustainability reporting. In this article, I aim to unpack and clarify some of the most widespread misconceptions to help organizations navigate this evolving landscape with confidence and clarity.
Myth #1: Sustainability reporting is a compliance matter
Despite growing global momentum, many organizations still view sustainability reporting through a limited lens - primarily as a compliance exercise. But this mindset misses the broader opportunity. Far from being a mere compliance exercise, sustainability reporting, particularly under frameworks such as the ISSB standards serves as a strategic tool for long term value creation, helping businesses strengthen resilience, enhance decision-making, and build long-term stakeholder trust.
Myth # 2: Focusing on sustainability means less profit
Some organisations view sustainability and profitability as opposing forces. According to the 2024 PwC survey, a third of respondents agree or strongly agree that companies should make expenditures that address ESG/sustainability issues relevant to their business, even if it reduces short-term profitability. This shows that investors increasingly view sustainability not as a cost centre, but as a strategic investment in long-term value creation. When embedded strategically, it fuels innovation, strengthens stakeholder relationships, and unlocks new markets.
Myth #3: Sustainability reporting is too costly and adds no real value
Getting started with sustainability reporting might require some upfront investment, for example: building data capabilities, training teams to stay ahead of new sustainability reporting standards and upgrading systems and processes to incorporate ESG metrics and targets. However, the long-term benefits often outweigh the initial costs. Companies that prioritize ESG often build stronger brands, attract investment, and improve risk management.
The 2024 PwC Global Investors Survey highlights growing pressure from investors and stakeholders for companies to increase transparency by producing high quality sustainability disclosures that go beyond financial reporting and align with international standards.
Myth#4: Sustainability reporting is for large organisation only
Sustainability reporting is not about size; it’s about transparency and accountability. Whether you are a startup, SME, manufacturer, or public institution, reporting on your sustainability risks, opportunities, and performance builds trust and credibility. Recognizing its growing importance across sectors, East African regulators have included SMEs and public institutions in their ISSB adoption plans. For instance, the guidelines of the Institute of Certified Public Accountants of Kenya (ICPAK) require SMEs to begin applying ISSB standards by 2029
In addition, most major sustainability frameworks, including ISSB and the Global Reporting Initiative (GRI), are designed to accommodate organizations of all sizes. The ISSB standards specifically include a 'proportionality concept' that helps companies implement reporting requirements without undue cost and effort.
Myth #5: Sustainability reporting is a public relation (‘PR’) exercise
One of the most persistent misconceptions about sustainability reporting is that it’s simply a public relations tool i.e. a glossy document meant to impress stakeholders without driving meaningful change. While it can enhance brand image, its true value lies in transparency and accountability. When done authentically, sustainability reporting becomes a strategic driver of long-term success, not just a communications tool.
In conclusion, in East Africa, rising stakeholder demand for ESG transparency is transforming sustainability reporting into a strategic asset. By aligning with global standards like ISSB, organizations can clearly communicate impact, risks, and opportunities. In a landscape increasingly defined by climate and social challenges, stakeholder scrutiny, and shifting capital flows, ESG and sustainability reporting is not just good governance, it’s a competitive advantage.
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