African businesses seeking investment are facing growing pressure to demonstrate how they manage environmental, social and governance (ESG) risks, but meeting international reporting requirements alone will not guarantee access to capital. At the ENGAGE Africa 2026 Conference in Cape Town, Rosalind Kainyah MBE, an international speaker on ESG and responsible business, argued that investment readiness must become a two-way process in which African companies demonstrate their ability to manage material sustainability risks while investors and standard-setters better understand the commercial and operating realities of African markets.
The argument comes as ESG assessments become increasingly embedded in investment due diligence, lending decisions and ongoing performance monitoring. For companies seeking international capital, the ability to provide reliable information on governance, environmental exposure, labour practices and risk management can influence how investors assess their prospects and price the risks associated with financing them.
Yet Kainyah contends that the conversation has become too focused on whether African businesses can satisfy investor questionnaires and comply with externally developed standards. In her view, companies must also develop the confidence and technical understanding to identify which requirements are relevant to their business models, explain why certain questions may not apply and propose credible alternatives where local conditions require a different approach.
For many African small and medium-sized enterprises, the difficulty is not necessarily the absence of responsible business practices but the inability to demonstrate them in ways investors recognise. Informal record-keeping, governance structures concentrated around founders or dominant chief executives, and limited documentation of ESG risk management can increase perceived investment risk. Even where businesses have effective operational practices, insufficient evidence can make those strengths difficult for external financiers to assess.
The distinction matters because investment decisions depend on more than the existence of sustainability policies. Investors want to understand whether a company can maintain operations, manage costs, protect its reputation, access markets and generate returns over time. ESG performance contributes to that assessment, but it must be connected to the underlying commercial strength of the business.
Kainyah therefore distinguishes ESG readiness from investment readiness. A company may produce a sustainability report aligned with international standards and still lack the financial performance, governance arrangements or business model required to attract investment. Conversely, a commercially strong enterprise may struggle to secure financing if it cannot explain how its environmental and social risks are managed.
This places finance leaders, particularly chief financial officers, at the centre of the investment readiness process. Their responsibility extends beyond compiling information for investors. They must understand how sustainability issues affect cash flow, operating costs, growth, market access and long-term business value, while determining which evidence is relevant to investment decisions.
The relationship between businesses and capital providers also needs to reflect the value each party brings to a transaction. African enterprises require financing to expand, strengthen operations and enter new markets. Investors, however, are also seeking opportunities to deploy capital and generate returns. Currency liquidity and exit risks may influence the terms of investment, but Kainyah argues that the growth potential of African businesses should also be recognised when capital providers assess risk and value.
This requires a more balanced approach to ESG due diligence. Rather than treating investor questionnaires as fixed compliance exercises, businesses should understand the purpose behind each question and its connection to their commercial performance.
Kainyah illustrates the point through an example involving a London-listed company on whose board she serves. The company received an investor questionnaire containing more than 900 ESG-related questions, but only 15 were considered relevant to its operations. It responded to those questions and explained why the remainder did not apply. The investor continued to invest. For Kainyah, the example demonstrates that a company can engage constructively with investor requirements without automatically accepting every request.
Understanding the purpose of a question can also help businesses provide more meaningful information. A request for water-use data, for example, may be intended to establish whether production depends on the availability of water and whether shortages could disrupt operations. Questions about labour conditions may be examining the risks of workplace injuries, industrial action or workforce instability. Climate-related questions can help investors assess exposure to physical risks and the costs associated with the transition to a lower-carbon economy, while governance questions examine the reliability of management and the protection of invested capital.
The ability to interpret these questions is particularly important for African businesses operating under conditions that may differ substantially from those assumed by international reporting frameworks. Standards developed in Europe or other markets can establish common expectations, but their application may require adaptation when they encounter different infrastructure, supply-chain and data realities.
An industrial manufacturer in an African market, for instance, may face electricity supply interruptions that are less prominent in the operating assumptions of a European business. An agribusiness sourcing from hundreds of smallholder farmers may struggle to meet digital traceability requirements designed around suppliers with established data systems. These differences do not remove the underlying environmental or social risks, but they influence how companies can measure and manage them.
Kainyah draws a distinction between adapting a requirement and using local conditions to excuse poor performance. Businesses should understand the outcome an investor is seeking and demonstrate how an alternative approach can achieve it. This means presenting evidence that a proposed solution is appropriate to the operating environment while still addressing the underlying risk.
For investors and standard-setters, the implication is that global consistency should not become an assumption that every business must apply identical processes regardless of context. African companies can contribute practical knowledge on circular business models, community relationships and operating under resource constraints. Some enterprises already adopt resource-efficient practices because they are commercially necessary, rather than because they are required to meet a sustainability performance indicator.
Circular production models, for example, can emerge where access to raw materials is expensive or unreliable. Strong relationships with local communities can help businesses maintain access to labour, customers and the social acceptance needed to operate. These practices can create economic and operational value, even when they are not formally documented through conventional ESG reporting systems.
The challenge is to make those contributions visible and measurable. African businesses must improve their records, governance systems and risk management evidence, while capital providers must remain open to understanding how responsible business practices operate in different markets. Contextual relevance, in Kainyah’s argument, should not reduce the rigour of sustainability assessment; it should improve the quality of the assessment by connecting requirements to actual business risks and performance.
She identifies five questions that an investment-ready business should be able to answer: which environmental, social or governance factors drive or threaten its value; which specific ESG issues matter to those value drivers; how the company manages them; what evidence demonstrates that management is effective; and whether it can explain and propose a credible alternative when an investor requirement does not fit its circumstances.
The final question is particularly important because it requires more than familiarity with reporting standards. It demands commercial judgement, a clear understanding of the business and evidence to support the proposed alternative. Without that foundation, challenging an investor’s requirements may be interpreted as unwillingness to meet reasonable expectations.
The wider implications extend beyond individual businesses. Professional and industry bodies can help produce credible African data that gives investors a stronger basis for assessing risk. Stronger domestic capital markets can also broaden financing options and reduce the extent to which external investors determine investment terms. Building local institutional capital, technical expertise and market information would give African businesses and financial institutions a greater role in shaping how investability is understood.
Kainyah argues that African businesses should move from being passive recipients of international standards to active participants in the development and application of those standards. This does not require rejecting global capital or abandoning established ESG frameworks. It requires a more informed relationship in which companies understand international expectations, investors recognise local realities and both sides remain focused on responsible business performance and value creation.
The shift also places greater responsibility on finance leaders. Sustainability cannot remain isolated within specialist departments if it is to influence investment decisions. Chief financial officers and other finance professionals are positioned to connect ESG risks with financial performance, assess the relevance of investor requirements and provide the evidence needed to support credible engagement.
As African businesses seek to attract capital in an increasingly demanding investment environment, the central question is no longer simply whether they can answer investor ESG questionnaires. It is whether they can demonstrate how sustainability contributes to business value, challenge requirements that do not reflect their operating realities and offer solutions that remain rigorous and commercially sound.
For investors, the corresponding test is whether their assessment processes can recognise the diversity of African business models without compromising accountability. The capital reset, as Kainyah presents it, will depend on both sides being prepared to learn, adapt and negotiate. Investment readiness is not a one-way exercise in compliance; it is a shared process of establishing the conditions under which responsible businesses can attract capital and deliver sustainable returns.
