Q&A: Can ESG bring capital to African renewables?

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Environmental, Social, and Governance (ESG) has become crucial for investment and risk management in the energy sector. Companies are increasingly seeking ESG advisory services. Renewables Rising interviewed ESG advisor Alice Ayuma, who warns against blindly applying international standards without adapting them to local contexts.

• Her view on the sector is that a grey area exists in ESG adoption among corporates on the continent. She is steadfast that renewables need to be considered within the correct African context, not a copy-and-paste approach of what is being used.

• Stakeholder engagement is crucial for this. While profit and social impact can sometimes be at odds, companies must remain conscious of their environmental and social footprint. So, have you engaged with all relevant stakeholders properly? And just to clarify, stakeholders don’t mean just shareholders.

Q: What is the biggest frustration you see with ESG adoption in Africa’s renewable energy sector?

Ms Ayuma: The number one pain point, which is very sad, is the lack of awareness and actual understanding of the value proposition of ESG in renewables. Many do it for PR, or just to say their farm is green, but they don’t know the core value of why ESG should be included in energy consumption or operations. Get that right, then your approach is effective.

Another gap is having the right data approach: how do you collect, manage, and use data for decision-making? Many companies lack this and don’t really understand why they want to use renewable energy; it's political, PR, sustainability, profit, or cost-cutting?

Also, many blindly adopt Western ESG expectations. What renewables mean in Switzerland or Western countries is not what they mean here in Africa. The context is very different.

Q: You’ve mentioned how local African culture clashes with some ESG standards, especially labour norms. Can you elaborate?

Ms Ayuma: I am very strong on localisation of international sustainability practices, especially those from foreign countries. The labour component is a particular no-no. Take child labour, that’s a classic example. In many African farms, children help their parents during weekends or holidays. This is how knowledge and heritage are passed down; it’s a survival practice, not exploitation in the negative sense. 

But some international ESG regulations label this as child labour abuse. This rigid interpretation harms communities and businesses by breaking traditions and livelihoods. We need clear distinctions and localised ESG frameworks that protect children’s rights but appreciate these cultural differences. Otherwise, these rules become obstacles to sustainable development rather than enablers.

This is an area where stringent export regulations hurt Africa. These external regulations don’t match our cultural and economic realities and are hindering sustainable development here.

There's a wind power plant that was supposed to be or is being constructed somewhere in northern Kenya, either Turkana or somewhere where there was a hefty lawsuit and some buildings were attacked in terms of being lost because that renewable energy company did not do the right engagement with the community around. To see, putting up wind and turbines, how it is affecting the livelihoods of these people who are pastoralists. It also has to do with the fact that these investors who are investing in green energy come with financial muscle. So they can pay their way out of setting these businesses without considering that even if they have money, I mean, the society is the heartbeat of how successful your business is going to be, or rather, your plan, your power plan.

Q: How do you approach ESG standards with African companies? Which ones matter most?

Ms Ayuma: ISO 14001 for environmental management and ISO 50001 for energy are fundamental. Also, GRI reporting is key for transparency. These global standards help companies measure and improve, but more importantly, they unlock critical funding from banks and development finance institutions like the AfDB and World Bank, which require compliance with such frameworks to approve projects. However, it’s not enough to just conform. We must contextualise these standards so they actually work here. This means adapting strategies that consider African market realities, financial structures, and social conditions.

I tell companies to view this as enabling growth, not burdensome compliance. When done right, these standards help them attract serious investors, access preferential financing, and scale sustainably.

Q: What about embedding ESG in governance? How do you convince executives that it’s worth investing in?

Ms Ayuma: Executives are practical. They want to know the value of the return on investment. I focus on the business case, showing how ESG initiatives reduce operational costs, mitigate compliance or reputational risk, and build competitive advantage. Stories alone don’t move executives; data, numbers, and tangible metrics do. I help boards see ESG as a strategic priority that is core to business success, not just “nice to have” or corporate social responsibility window dressing.

I’ve trained board members who initially saw ESG as a checkbox. Once they understand how ESG aligns with risk management and operational efficiencies, their commitment grows. It’s about shifting the mindset from CSR to core business strategy.

Q: How can SMEs realistically engage with ESG and renewables?

Ms Ayuma:SMEs often struggle because they lack resources and technical expertise. Many don’t know how to audit energy or improve efficiency; their bills can be shockingly high. One solution is collective action. SMEs in industrial clusters should pool resources to afford shared renewable energy infrastructure. Associations like KEPSA and KAM must step up, providing training, facilitation, and financing models like leasing or pay-as-you-go to improve SME access to renewables. This shared approach is practical and cost-effective.

I also see a gap in awareness. Many SMEs don’t yet grasp how energy inefficiency bleeds their competitiveness or why renewable energy adoption can save money long term. Capacity-building and practical financing solutions are essential.

Q: How should renewable projects measure their social impact?

Ms Ayuma: Clear, measurable social and economic outcomes are essential for credibility with communities and investors. Metrics must be transparent and meaningful, not tokenistic. Models that promote community ownership, equity, or benefit-sharing generate trust and better long-term outcomes. Social impact is not a side show; it’s central to scaling renewables sustainably in Africa.

Projects need to be transparent with impact data and maintain active partnerships with communities to ensure benefits are real and visible. This builds goodwill and investor confidence.

Q: Looking ahead, what ESG trends must African renewable energy stakeholders watch?

Ms Ayuma: The landscape is shifting quickly, especially geopolitically. Take China’s electric vehicle push in Africa, it’s rewriting energy demand and infrastructure needs. African companies must stay nimble, localise ESG strategies, and focus on socially equitable and economically viable solutions. The future won’t just be about environmental impact but governance transparency and social justice. These three pillars must all work together.

Stakeholders should also prepare for evolving international standards and a growing emphasis on digital monitoring, data transparency, and aligning ESG with financing innovations.