African companies are facing a new sustainability challenge that sits beyond their own operations: obtaining reliable environmental and social data from suppliers, distributors, customers and other value-chain partners as global disclosure requirements increasingly connect sustainability information to financial risk, market access and investment decisions. The challenge is particularly significant for African businesses integrated into international supply chains, where weak data from smaller suppliers can complicate emissions reporting, increase compliance costs and make it harder for companies to demonstrate resilience to investors and overseas buyers.
The issue was highlighted by Akinyemi Awodumila, a PwC Partner, in a Business Daily column published on September 6, which examined the difficulty companies face in collecting sustainability information beyond their formal reporting boundaries. The article points to a central tension in the emerging disclosure landscape: while financial reporting generally focuses on the reporting entity, sustainability-related risks and opportunities can arise throughout the wider value chain.
That distinction is becoming more important as the International Sustainability Standards Board’s IFRS S1 and S2 standards move sustainability information closer to the financial reporting system. IFRS S1 requires companies to disclose material information about sustainability-related risks and opportunities that could reasonably be expected to affect their prospects, while the standards recognise that those risks can arise across a company’s value chain. The IFRS Foundation defines the value chain broadly, covering relationships and resources involved in creating products and services from conception through delivery, consumption and end-of-life.
For companies operating in Africa, this means that sustainability data can no longer be treated simply as information produced by a corporate sustainability department. Procurement teams may need information from suppliers, finance departments may need to understand the financial implications of climate exposure, risk managers may need evidence of dependencies and operations teams may need data on energy, logistics and resource use.
The most difficult part may be Scope 3 emissions. Unlike Scope 1 emissions generated directly by a company’s operations and Scope 2 emissions associated with purchased energy, Scope 3 covers indirect emissions across upstream and downstream activities. The GHG Protocol’s Corporate Value Chain Standard divides Scope 3 into 15 categories, including purchased goods and services, transportation, waste, business travel, use of sold products and end-of-life treatment.
The resulting data problem is substantial. A manufacturer cannot necessarily calculate the emissions associated with its raw materials without information from suppliers. A bank may need information from borrowers to understand financed emissions. A retailer may require data from producers, logistics providers and distributors. An agricultural exporter may increasingly need evidence of production practices, land use, transport and processing across a fragmented network of farmers and intermediaries.
This is especially relevant in Africa, where supply chains often include large numbers of small and medium-sized enterprises operating with limited digital infrastructure and modest reporting capacity. A multinational buyer may have sophisticated sustainability systems while some of its local suppliers continue to rely on paper records, spreadsheets or basic accounting systems. The result is an information asymmetry that can complicate reporting for the larger company while placing new demands on smaller businesses seeking to remain part of formal supply chains.
According to the GHG Protocol, companies can use both primary and secondary data when calculating Scope 3 emissions. Primary data comes from specific activities within a company’s value chain, including information supplied by business partners, while secondary data can include industry averages, government statistics, financial information and other proxy data. The protocol recommends prioritising primary data where possible for important activities, while allowing secondary data where supplier-specific information is unavailable or insufficient.
That distinction is important for African markets because demanding perfect data from every supplier at once could exclude smaller businesses rather than improve the quality of reporting. A more practical approach is to identify the suppliers and activities that are financially or environmentally material, collect higher-quality information from those areas first and progressively improve coverage.
The same principle applies to agriculture, one of Africa’s most fragmented but economically important value chains. A food processor sourcing from thousands of smallholder farmers may struggle to obtain consistent information on fertiliser use, land management, energy consumption, transport or production yields. Yet those variables can influence both the environmental footprint of the final product and the company’s exposure to climate and supply risks.
Digital traceability systems are beginning to address part of this problem. Kenya, for example, launched a national horticulture traceability platform in June designed to monitor fresh produce from farms to export destinations and strengthen compliance with food safety and international market requirements. Kenya’s horticulture exports generated about $1.56 billion in 2024, illustrating how the ability to document conditions across a value chain can become connected to the competitiveness of an export sector.
The significance extends beyond climate reporting. Value-chain information can help companies understand where operational disruptions may emerge, where suppliers are exposed to water or energy shortages, and where labour, land or regulatory risks could affect production. In that sense, the data challenge is also a risk-management challenge.
For investors and lenders, the quality of such information can affect the assessment of corporate resilience. IFRS S1 is designed around information that could influence decisions by investors, lenders and other creditors, including risks and opportunities that emerge through a company’s dependencies and relationships. The IFRS Foundation has also emphasised the relationship between sustainability information, cash flows, access to finance and cost of capital.
This creates a potentially important development issue for Africa. Companies with stronger data systems may find it easier to demonstrate their exposure to sustainability risks and respond to requests from international investors and customers. Businesses unable to produce credible information could face higher administrative costs, more extensive due diligence or difficulty responding to procurement requirements.
The risk is particularly relevant for export-oriented sectors such as agriculture, manufacturing, mining and consumer goods, where African producers increasingly operate within supply chains shaped by requirements developed outside the continent. Sustainability data is therefore becoming part of the infrastructure through which African companies access foreign markets, rather than simply a reporting requirement attached to an annual corporate document.
There is also a governance dimension. Value-chain data involves commercially sensitive information, making controls around collection, access, storage and sharing important. Business Daily’s analysis argues that trust between value-chain partners is a prerequisite for meaningful data exchange, particularly where companies operate alongside competitors or where suppliers are reluctant to disclose commercially sensitive information.
For smaller African companies, the cost of meeting these demands could become a competitiveness issue. If sustainability questionnaires, emissions calculations and data-assurance requirements become increasingly complex, companies with limited technical and financial resources may struggle to meet the expectations of larger buyers. That could reinforce existing gaps between formal, well-capitalised businesses and smaller firms operating at the margins of organised supply chains.
The response does not necessarily require every company to build an elaborate sustainability-data platform. Shared standards, sector-level data systems, supplier training, common reporting templates and interoperable digital infrastructure could reduce duplication and make it easier for smaller businesses to participate. The GHG Protocol already provides mechanisms for using secondary data where primary information is unavailable, while its guidance recommends focusing supplier engagement on material activities and progressively expanding data collection.
African financial and regulatory institutions also have a role in determining whether this transition becomes an administrative burden or an improvement in economic infrastructure. Kenya’s planned mandatory adoption of IFRS S1 and S2 for Public Interest Entities from January 2027 illustrates how quickly the issue is moving from voluntary sustainability communication towards formal corporate disclosure. Earlier ASM analysis has noted that the transition will require companies to strengthen data systems, controls and validation processes across sectors.
The broader development implications are significant. Africa is seeking greater participation in regional and global value chains while simultaneously trying to attract capital for infrastructure, manufacturing, agriculture and energy. The African Development Bank’s 2026 Sustainable Development Report identifies persistent climate, fiscal and economic pressures as constraints on development progress, reinforcing the importance of institutional capacity and better information in managing these risks.
Value-chain data should therefore be viewed less as a technical reporting problem and more as part of the infrastructure of modern African commerce. Reliable information can help companies understand their exposure to climate and resource risks, improve procurement decisions, respond to investors and maintain access to increasingly data-intensive international markets.
The immediate challenge is that many African value chains remain too fragmented for high-quality information to move easily between participants. The longer-term issue is whether companies, regulators and industry bodies can develop systems that allow that information to become consistent, secure and useful without imposing disproportionate costs on smaller suppliers.
As sustainability disclosure moves closer to mainstream financial reporting, the quality of a company’s report will increasingly depend on information it does not generate itself. For African businesses, the ability to collect, verify and use that information across the value chain could become an increasingly important determinant of market access, financing conditions, operational resilience and competitiveness.
