- The skills question will be asked in public. Under IFRS S1 and S2, which Kenyan public interest entities apply from 1 January 2027, the report must explain how the board makes sure it has the skills to oversee sustainability and climate risk.
- Kenyan boards are committed but not yet equipped. In ICPAK's late-2024 survey, 69.5% of entities expected to be ready by 2026; ICPAK's 2026 assessment put 25% in its two upper readiness bands.
- Start from the risk register, not the CV. Map the two or three ESG issues most likely to move your results, then check which directors could question management on each.
- Train on your own issues, not general awareness. Point the board development hours the governance codes already require at your company's material risks and the new disclosure standards.
- Five practices build the skill inside the boardroom: map the skills, recruit for the gaps, train on your issues, pair directors with the people who compile the data, and review gaps and results once a year.
Most boards know they need more ESG expertise. Far fewer can say which expertise, for which risks, and how they will know when they have it. Board ESG expertise is the ability of directors, as a group, to understand the environmental, social and governance issues that could change a company's results, and to question management's figures on them. It is not the same as caring about sustainability, and it is not something a single appointment can supply.
In our work with boards and senior leadership teams across East Africa over the past decade, the usual response to an ESG skills gap has been to hire an advisor and add a session to the annual retreat. That is a sensible start for a first reporting cycle and a poor permanent arrangement, because a board that only ever hears about sustainability through a consultant never learns to ask the second question.
The question now has a deadline. From 2027, many Kenyan companies must say in their published reports how the board makes sure it has the skills to oversee these risks. This article explains what board ESG expertise covers, why Kenyan boards need it before that first report, and five practices that build it inside the boardroom rather than renting it from outside.
What Board ESG Expertise Means
A board does not need to produce an emissions inventory or run a materiality assessment. Management does that work. The board needs enough knowledge to judge whether management's work is credible, which is a narrower and more useful target. In practice, board ESG expertise has three parts:
- Knowing the material issues. Directors can name the two or three sustainability risks most likely to affect this company's costs, revenue or access to capital, and explain why those and not others.
- Reading the evidence. Directors can look at a reported figure, such as energy use per unit produced or staff turnover at a plant, and ask where it came from, what changed since last year and what sits outside it.
- Understanding the rules. Directors know what the reporting standards require the company to disclose, including what they require the board to say about itself.
The first two are specific to the company. A director with a strong sustainability background from development finance may know a great deal in general and still have little to add on water risk at a brewery. The difference between an ESG credential and ESG competence is covered in our article on the board's role in ESG reporting; this article is about how a board builds the competence.
The third part is where the deadline sits. The IFRS sustainability standards ask a company to disclose how its board, or the committee responsible, "ensures that the appropriate skills and competencies are available" to oversee the strategies that respond to climate-related risks and opportunities. ICPAK restates this requirement in its technical bulletin on sustainability reporting. A board that has never assessed its own skills will have very little to write.
Why Kenyan Boards Need ESG Expertise Before 2027
Kenyan public interest entities, which include listed companies, banks, insurers, pension schemes, state corporations reporting under IFRS and deposit-taking SACCOs, must apply IFRS S1 and S2 for accounting periods beginning on or after 1 January 2027, under ICPAK's national adoption roadmap. Large companies outside that group follow in 2028 and smaller ones in 2029. For most boards, the first report under the new standards is a little over a year away.
ICPAK's own data shows how far there is to go. In November 2024 it surveyed 95 entities about their plans: 51.6% expected to be ready by 2025, and 69.5% by 2026. Its structured 2026 assessment of 385 public interest entities then found that only 25% had reached the "Developing" or "Advanced" bands of its readiness scale.
Expected and Assessed IFRS S1 and S2 Readiness, Kenyan Entities, 2024 and 2026
Expectations from ICPAK's November 2024 survey of 95 entities; readiness from its 2026 assessment of 385 public interest entities. Source: ICPAK, Kenya IFRS S1 & S2 Readiness Report, 2026 edition
Expected ready by 2025: 51.6%. Expected ready by 2026: 69.5%. In the Developing or Advanced band in 2026: 25%.
Each bar is a share of that study's own respondents. The two studies cover different groups of entities, so the bars show the gap between expectation and measured readiness, not a change within one group.
ICPAK calls the pattern a "readiness paradox". Boards are organizing for sustainability faster than their companies can measure and report it: strategic intent averaged 1.53 out of 4 against 1.39 for the ability to produce the required disclosures, and 57.1% of entities scored higher on intent than on capability. ICPAK's own recommendation follows from that. Technical, line-item support will turn existing board commitment into reportable output faster than further awareness campaigns.
ICPAK sorted Kenya's public interest entities into three groups by comparing what their boards had committed to with what they could actually report. About one in four, 24.9%, fell into the group it labels "All Talk", where board-level engagement has not yet turned into reporting capability. Board ambition is not the shortage. Board skill at turning it into figures is.
Source: ICPAK, Kenya IFRS S1 & S2 Readiness Report, 2026 Edition
That is the case for building board expertise now rather than after the first report. The directors who approved the commitments are the same people who will have to question the figures behind them.
5 Ways to Build ESG Expertise Inside the Boardroom
None of these practices needs a new committee or a large budget. Each turns a general intention into something a board can check.
1. Map the board's skills against the risk register
Start with the issues, not the people. Identify the two or three ESG issues most likely to affect your financial results, then ask which directors could question management on each one without a briefing note. The World Economic Forum's principles for climate governance on corporate boards put the question plainly: has an assessment of climate-competence gaps taken place, and who is doing it? Most boards that say they lack ESG expertise have never written down which expertise they lack.
2. Recruit for the gaps the map shows
Once the gaps are named, recruit for them. An operations executive who understands energy costs may be worth more to a manufacturer's board than a sustainability generalist, and a former water utility engineer more to a beverage company. Boards skip this practice most often, because it means deciding what is material before the vacancy opens. Where a seat will not open soon, the training and pairing practices below can close part of the gap in the meantime.
3. Point director training at your own issues
Kenya's governance codes already require board development time. The Capital Markets Authority's governance code for listed companies asks every board member to secure at least twelve hours a year "on areas of governance from credible sources". The question is what those hours buy. A general course on why ESG matters adds little to a board that has already committed to it. A session on how IFRS S2 treats your sector's emissions, or on how your lender will price climate risk, adds a great deal.
4. Pair directors with the people who compile the data
Put a director alongside the person who actually assembles the figures, not the executive who presents them. One working session a year is enough. The director learns where the numbers are weakest, which estimates carry the most judgment and which suppliers never return their data. The staff member learns what the board worries about, and management learns that the board will look beneath the summary.
5. Review gaps and results once a year
Most board sessions on ESG report progress. Hold one session a year devoted to where the company falls short of its own commitments or of the standards, and to what the program delivered that year in lower costs, better lending terms or new customer contracts. The first half produces information the progress report leaves out. The second keeps sustainability tied to the business, since an argument that only pays off in a decade rarely survives a bad quarter.
Is your board ready to say how it knows it has the right skills?
Our Strategic Planning program includes ESG governance work with boards and executive teams: mapping material issues, assessing the board's skills against them and building director sessions around your own risks rather than general awareness. Request a proposal.
What a Board ESG Skills Matrix Looks Like
A skills matrix records, for each material issue, what the board needs to be able to do, who on the board can do it today and how any gap will close. Most boards already keep a skills matrix for finance, law and industry experience; the CMA code expects the nomination committee to review the board's mix of skills every year and disclose it in the annual report. ESG rows belong in the same document, not a separate one. An illustrative version for a mid-sized Kenyan manufacturer might read:
| Material issue | What the board must be able to do | How to close the gap |
|---|---|---|
| Energy costs and emissions | Question the energy baseline and judge whether efficiency targets are realistic | Recruit an operations or engineering director at the next vacancy |
| Water supply | Understand how a drought year would affect production and cost | A site visit and a working session with the plant engineer |
| Supplier labor practices | Test how far down the supply chain the company can actually see | Pair the audit committee chair with the procurement lead |
| Climate disclosure | Know what IFRS S2 requires and which figures will be assured | A focused session for the full board before the first report |
The point of the matrix is not the table itself. It gives the board an honest answer to the question IFRS S1 and S2 now ask, and it turns "we need more ESG expertise" into a short list of decisions with owners and dates.
How the Expectations Differ by Sector in Kenya
Kenyan boards face the same reporting standards but different rulebooks on skills, and the gaps are not evenly spread. ICPAK's assessment found readiness varying sharply by sector, which it linked to differences in regulatory exposure, board sophistication and access to technical capacity.
- Listed companies work under the CMA code's twelve hours of board development and its annual, disclosed skills review. Listed companies outside banking and insurance were among the readiest sectors in ICPAK's assessment.
- Banks have had climate-specific guidance from the Central Bank of Kenya since 2021, which puts climate risk squarely on the board's agenda.
- State corporations follow the Mwongozo code, which asks each board to carry out a competence needs assessment and to put in place an annual development program of at least two days per board member.
- Pension schemes are the hardest case. ICPAK counts 343 schemes required to report, more than six times the next-largest sector, and notes that many trustees are lay volunteers rather than professional asset managers. It recommends trustee-level training on the basics of IFRS S1 and S2.
The Central Bank of Kenya's 2021 climate risk guidance gives each bank's board "the primary responsibility to oversee effective management of climate-related risks". It also names ways to resource the work: capacity building of staff, seeking expert advice, recruiting talent and strengthening data systems. A bank board that relies on advice alone is using one of four routes.
Source: Central Bank of Kenya, Guidance on Climate-Related Risk Management (2021)
The practical lesson is to start from the rulebook your board already follows. A state corporation that is required to assess its board's competence every year can add ESG rows to that assessment at no extra cost. A pension scheme can pool training through its administrator, which ICPAK suggests may close gaps faster than each scheme building capacity alone.
Mwongozo also offers a way around a slow appointment process. Where a committee lacks specific skills, the board may co-opt skilled non-directors with the oversight body's approval, though a co-opted member cannot chair it. A state corporation can bring water or energy expertise onto its risk committee without waiting for a board seat.
Three Common Board ESG Training Mistakes
The awareness course
The board attends a general session on why sustainability matters and counts its expertise as built. An awareness course teaches a director that ESG matters; it does not teach them to read their own company's water data. ICPAK's findings point the same way: Kenyan boards already have the intent, and what they lack is the technical ability to turn it into disclosures. Spend the hours on your material issues and the standards.
The single ESG director
The board appoints one director with a sustainability background and routes every ESG question to them. If one director carries all of the board's ESG knowledge, the board does not have expertise; it has a dependency. The rest of the board stops engaging, and the knowledge leaves when that director does.
The World Economic Forum's climate governance principles treat board expertise as something to plan for. One guiding question asks how the board will make sure climate awareness does not stop if "an important individual or a vocal climate champion leaves the organization or the board". A skills matrix with one name in every ESG row fails that test.
Source: World Economic Forum, How to Set Up Effective Climate Governance on Corporate Boards (2019)
Training only at induction
New directors receive a briefing on the company's sustainability program in their first month and nothing afterward. The standards, the company's risks and the assurance rules will all move during a director's term. Ongoing development, reviewed against the skills matrix each year, is what keeps the board's answer to the IFRS skills question true.
Frequently Asked Questions
What is board ESG expertise?
It is the ability of directors, as a group, to understand the environmental, social and governance issues that could change a company's results, and to question management's figures on them. It has three parts: knowing which two or three issues are material to this company, reading the evidence behind reported figures, and understanding what the reporting standards require. The board does not produce the data; it judges whether management's work is credible.
Do Kenyan boards have to disclose their ESG skills?
Many will, from 2027. Kenyan public interest entities, including listed companies, banks, insurers, pension schemes, state corporations reporting under IFRS and deposit-taking SACCOs, must apply IFRS S1 and S2 for accounting periods beginning on or after 1 January 2027. Those standards ask the company to disclose how the board or responsible committee makes sure the appropriate skills and competencies are available to oversee its sustainability and climate strategies.
How can a board build ESG expertise?
Five practices work together. Map the board's skills against the ESG issues on the risk register, recruit for the gaps the map shows, point director training at the company's own material issues, pair directors with the staff who compile the data, and hold one session a year on where the company falls short and what the program delivered. None of them needs a new committee or a large budget.
How much board training do Kenyan governance codes require?
The Capital Markets Authority's code for listed companies asks each board member to secure at least twelve hours of board development a year from credible sources, and expects the nomination committee to review and disclose the board's skills mix annually. The Mwongozo code for state corporations asks boards to carry out a competence needs assessment and run an annual development program of at least two days per board member.
What is a board ESG skills matrix?
It is a record of the company's material ESG issues, what the board must be able to do on each, who on the board can do it today and how any gap will close, through recruitment, training, a site visit or pairing a director with the staff who compile the data. ESG rows belong in the board's existing skills matrix rather than a separate document, and the matrix gives the board an honest answer to the skills question the new standards ask.
Is a general ESG awareness course enough for directors?
Rarely. An awareness course teaches directors that ESG matters, which most boards already accept. ICPAK's 2026 assessment found Kenyan boards ahead on intent and behind on the technical ability to produce disclosures, and recommended line-item support over further awareness campaigns. Director training does more good when it covers the company's own material issues and what IFRS S1 and S2 require.
Conclusion
Board ESG expertise is built the way other board skills are: by naming what the board needs, recruiting and training for it, and checking every year whether the gaps have closed. The new standards simply make that work visible.
If your most ESG-literate director stepped down tomorrow, which of your company's sustainability figures could the rest of the board still question?
If the honest answer is "very few", our Strategic Planning program can help your board build that expertise before the first report. Request a proposal and we will start with where your board stands today.
