In my day-to-day practice, I encounter the real-world consequences of poor corporate governance and neglected employee welfare. I’ve represented clients across all levels of courts in Kenya, from unfair dismissal cases to disputes rooted in discriminatory policies and opaque decision-making structures. I’ve also conducted legal audits for both parastatals and private entities. The findings are often consistent, there is a troubling gap in how many institutions understand and apply the principles behind Environmental, Social, and Governance (ESG) frameworks, particularly the Social pillar.
We need to talk about this.
For many, ESG still sounds like a boardroom buzzword imported from the West. But its core values are enshrined in our own Constitution and labor laws. ESG is not foreign, it is local, and when applied meaningfully, it is transformative, not just for reputation or compliance, but for risk management and long-term sustainability.
Let’s start with what ESG really is.
Demystifying ESG, and Why “S” Deserves Centre Stage
ESG refers to a framework that evaluates how a company manages its environmental impact, treats its people, and governs itself. While all three pillars are critical, the Social component is often the most neglected, and ironically, the most visible when it fails.
This “S” is not abstract. It’s about how employers treat employees, how they ensure fairness, safety, non-discrimination, equal opportunity, and meaningful stakeholder engagement. In simpler terms, it’s about people, their dignity, their welfare, their value in the organizational ecosystem.
We saw the stark impact of ignoring the Social pillar in Ol Pejeta Ranching Ltd v David Wanjau Muhoro. After 25 years of service, Mr. Muhoro was dismissed following an audit that found weaknesses in financial controls, but which exonerated him of wrongdoing. He wasn’t given the audit report during the disciplinary hearing. His appeal was dismissed without being heard. To make it worse, he was being paid less than his white counterparts despite holding similar roles.
The courts agreed, this was not only an unfair termination, it was also racial discrimination. The outcome, substantial damages and reputational harm that no PR campaign can spin away.
What failed here wasn’t just a process. It was a system, a governance structure that did not prioritize transparency, inclusion, or fairness. That is what the Social pillar of ESG seeks to correct.
The Cost of Ignoring “S” in ESG
Poorly managed employment structures are among the most frequent sources of litigation in Kenya. The root causes range from lack of due process to opaque hiring and promotion practices, pay inequity, and systemic discrimination.
I’ve seen these patterns play out even in institutions with written HR manuals and codes of conduct. Why? Because documents are not culture. Governance is not paperwork. True ESG compliance requires organizations to go beyond the formalities, to audit their actual practices, assess the lived experiences of their staff, and embed fairness into their decision-making.
Consider also the Mt. Kenya Network Forum case. While centered on public appointments, it mirrors these same principles, fair representation, meaningful public participation, and merit-based inclusion. The court reminded us that participation must be real and inclusive, not ceremonial. The Social pillar demands nothing less from private institutions either.
Why ESG Should Matter to the Boardroom, Not Just the HR Desk
I often tell boards and executives, ESG is not a compliance tick-box. It’s a legal, strategic, and financial imperative.
First, from a legal risk perspective, adopting the Social pillar protects organizations from claims related to unfair labour practices, discrimination, and wrongful termination. Litigation like in the Ol Pejeta case doesn’t just lead to damages, it also exposes institutional weaknesses that shareholders, regulators, and the public will remember long after the judgment is read.
Second, poor governance and exclusionary practices lead to revenue leakage. Think of the costs associated with high staff turnover, demotivated employees, or loss of investor confidence when discriminatory practices surface. ESG is your insurance against these leakages.
And third, a strong ESG posture, especially on the Social front, boosts employee morale, brand reputation, investor interest, and long-term sustainability. It sends a message that your organization values people, and by extension, values integrity.
Bringing ESG to Life, The Way Forward
Kenya’s legal framework already provides the foundation, the Constitution, the Employment Act, the Climate Change Act, and the Public Officer Ethics Act, among others, all echo the spirit of ESG. The NSE has even issued ESG disclosure guidance. But implementation remains the elephant in the boardroom.
The real challenge is translating these principles into policies and practices that work. That’s where we must go next, through structured audits, strategic policy development, and ongoing review of governance mechanisms.
Organizations need to ask,
- Are our hiring, pay, and promotion practices equitable?
- Do we have clear and fair disciplinary procedures?
- Are we engaging staff meaningfully on matters that affect them?
- Is our internal culture aligned with our public commitments?
Answering these questions honestly, and acting on the answers, is where true ESG compliance begins.
A Personal Commitment
As someone who has sat across from employees in pain and boards in confusion, I believe this work is not just professional, it is deeply personal. I’ve seen what happens when institutions treat their people as liabilities instead of assets. I’ve also seen what’s possible when they commit to fairness, transparency, and good governance.
We have the tools, we have the framework. What we need now is the will, and the leadership, to make ESG real, especially the Social pillar that touches every human face in the workplace.
Mokua Manyara