Kenya takes lead on climate law in East Africa

When TripleOKLaw launched its dedicated climate change and sustainability practice in 2017, it was one of the first firms in Kenya to recognise how critical ESG factors would become in all areas of law.

“In the beginning nobody really understood what this was all about, but now it’s really starting to gather momentum,” noted Stephen Mallowah, a partner at TripleOKLaw LLP and head of its climate change and sustainability practice. “You have to really think about ESG across all practice areas now.”

Underscoring this shift in momentum, Nairobi hosted the African Climate Summit earlier in September as a way to further engage stakeholders on the importance of taking action on climate change, including the need for new funding mechanisms, developing partnerships and setting more ambitious commitments and pledges.

“The most important thing for us was really bringing the whole debate into the public space because people in Kenya don’t really pay attention to climate change issues; it’s not a daily conversation amongst Kenyans,” Mallowah said. “So one of the biggest impacts of the conference was bringing climate change front and centre and connecting it to events that have been impacting Kenyans, whether it’s droughts, floods or changing weather patterns.”

The regulatory backdrop is also sharpening its focus on climate change. The Kenyan government introduced its Climate Change Amendment Bill in August, refreshing the Climate Change Act 2016 by strengthening the regulatory environment around carbon trading. The market had become “a bit of a free for all” because in the past there were no reporting requirements or minimum standards to adhere to, explained Mallowah.

Kenya’s central bank also recently introduced climate risk reporting rules to ensure the country’s banks are factoring climate change and ESG considerations into operating and lending decisions.

“Financial institutions hadn’t been taking it seriously; now they are scrambling to come up with reporting frameworks and policies and so on,” said Mallowah.

While Kenya is leading on ESG issues in East Africa, that is partly because the country is being more heavily impacted by climate change than its neighbours.

“We are under pressure – our forests are diminishing through population growth and encroachment, and we have significant blue economy tourism that is at risk from rising sea levels, so we’ve been thinking about it probably a lot more than other countries,” Mallowah pointed out.

This situation means Kenyan businesses are now becoming more engaged on climate issues and how ESG impacts their bottom line.

The firm’s climate change and sustainability practice has been working on a wide range of green-related matters since its inception. The first was advising on a carbon trading transaction for a large power generating company. Since then it has advised a company that was working with the Kenyan government on a potential green bond; it has been working with an international consultancy on the creation of a green bank; and it has been advising on a number of energy developments, including a major geothermal plant and other renewable projects.

“Energy and climate change are now intertwined; for bankability purposes, you have to ensure that projects have as small an environmental footprint as possible,” emphasised Mallowah.

Other practice areas are also incorporating ESG considerations into their advice. For example, the real estate practice is increasingly dealing with green building certifications, while the tax advisory practice is helping companies secure tax exemptions by structuring projects as green developments.

“You have to think about ESG no matter what you are doing,” Mallowah concluded.

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