In January 2024, the European Union officially rolled out the European Sustainability Reporting Standards (ESRS) under the Corporate Sustainability Reporting Directive (CSRD). While these standards are binding for EU-based companies, they have far-reaching implications beyond Europe’s borders — and African businesses should take note.
The European Sustainability Reporting Standards (ESRS) provide a structured framework for companies to disclose their environmental, social, and governance (ESG) performance. Developed by the European Financial Reporting Advisory Group (EFRAG), these standards aim to ensure transparency, comparability, and reliability in sustainability disclosures.
On the surface, ESRS might seem like just another bureaucratic requirement imposed on companies operating in the European Union. But look a little closer, and you’ll find that these standards are poised to influence the way African businesses operate, report, and grow — whether they are ready or not.
The European Union has long been at the forefront of sustainability policy, but 2024 marked a turning point with the full rollout of the Corporate Sustainability Reporting Directive (CSRD). At the heart of this directive are the ESRS: a set of detailed guidelines that determine how companies should disclose their environmental, social, and governance (ESG) performance. The goal is to bring clarity and comparability to sustainability reporting, and ensure that companies are held accountable not just for profit margins, but also for their impact on people and the planet.
While these standards apply to EU-based companies, they are built on the principle of accountability across value chains — and many of those value chains extend well beyond European borders. They stretch into the cotton fields of Burkina Faso, the tea farms of Kenya, the copper mines of the Democratic Republic of Congo, and the tech startups of Lagos. African businesses — whether they are exporters, suppliers, subsidiaries, or partners — are increasingly part of global operations. And with that global integration comes responsibility.
For instance, take a Kenyan flower exporter that supplies bouquets to Dutch retailers. While the European client may be the one legally required to report under ESRS, they will, in turn, need to gather data on their entire supply chain. That means understanding how the flowers are grown, how water is used, how labourers are treated, and what emissions are produced throughout the process. If the Kenyan company cannot provide that information, or worse, if the data reveals unsustainable practices, the European buyer may choose to source elsewhere. The same applies to cocoa producers in Ghana, textile manufacturers in Ethiopia, or logistics companies in South Africa.
Read also: Navigating CSRD & ESRS: The future of sustainability reporting
But this story isn’t just about compliance or the fear of being cut off from lucrative markets. It’s also about opportunity. As the global economy becomes increasingly sustainability-driven, businesses that can demonstrate transparency, ethical governance, and environmental stewardship will rise to the top. Investors are now channeling billions into green finance. Development finance institutions are tying capital to ESG commitments. International buyers are prioritizing suppliers who can show verifiable impact. In short, sustainability is becoming the price of entry into global trade.
This is where ESRS offers a valuable framework. It covers everything from climate risks and water use to labour conditions, anti-corruption practices, and biodiversity impacts. And although designed for Europe, its structure reflects global sustainability trends and aligns with other frameworks like GRI (Global Reporting Initiative), IFRS Sustainability Disclosure Standards, and others. For African businesses that have already started reporting using GRI, the transition into ESRS-aligned reporting is not a leap into the unknown — it’s more like stepping onto a path already familiar, albeit now more structured and more stringent.
What makes ESRS particularly relevant for African contexts is its emphasis on “double materiality.” Unlike traditional reporting frameworks that focus solely on how sustainability issues affect a company’s financial bottom line, ESRS asks businesses to also assess how their operations impact society and the environment. In Africa, where climate vulnerability, resource dependence, and socio-economic challenges intersect so visibly, this dual lens is not only appropriate — it’s essential. It encourages companies to move beyond lip service and think deeply about their real-world footprint, from emissions and deforestation to community relations and human rights.
Still, it’s not going to be easy. Most African businesses — especially small and medium enterprises — lack the resources, expertise, and infrastructure to implement sophisticated ESG reporting systems. Data collection is patchy, internal awareness is low, and regulatory guidance is often missing. But rather than seeing these gaps as barriers, they should be treated as signals for where capacity building, innovation, and support are most needed.
There’s growing momentum on the continent to bridge this divide. Regional bodies, sustainability consultancies, and forward-looking companies are beginning to offer training, tools, and partnerships to help African businesses understand and adopt ESG best practices. Some governments are also developing national reporting frameworks inspired by global standards. And African entrepreneurs — especially those in clean tech, circular economy, and ethical sourcing — are already showing what’s possible when sustainability is treated not as a cost, but as a competitive advantage.
Ultimately, ESRS is more than a European obligation. It is an invitation- asking African businesses to view themselves not as peripheral actors in a distant compliance drama, but as equal players in a shared future. A future where the success of a company is measured not only by how much it earns, but also by how responsibly it earns it.
As the world moves toward a more just, inclusive, and sustainable economy, African businesses have a unique opportunity. By embracing standards like ESRS, they can shape their own narratives, strengthen their resilience, and unlock new avenues for growth — not just in Europe, but globally. The time to start is now.