KENYA Trends and Developments Contributed by: Sammy Ndolo, Brian Muchiri, Nicholas Owino and Valere Nyaboke, Cliffe Dekker Hofmeyr
Board oversight of ESG and sustainability Sustainability oversight has moved squarely into the boardroom. ESG is no longer treated as a delegated management function or a purely disclosure–driven exercise. Boards are increasingly expected to inte - grate environmental and social risks into corporate strategy and risk frameworks, oversee ESG perfor - mance with the same rigour applied to financial out - comes and ensure consistency between sustainabil - ity commitments, operational practices and market disclosures. This shift anticipates the forthcoming CMA ESG Code, which is being developed in collaboration with the International Finance Corporation and the NSE and is aligned with IFRS S1, IFRS S2 and standards based on the Task Force on Climate-related Financial Disclo - sures (TCFD). Boards are therefore expected to dem - onstrate substantive ESG understanding and over - sight capability, rather than symbolic endorsement. Technology, AI and governance controls Oversight of technology and artificial intelligence (“AI”) has emerged as a significant and expanding board responsibility. Boards are increasingly expected to ensure the responsible deployment of AI and auto - mated decision–making systems, with clear account - ability structures, transparency and meaningful human oversight. Where AI systems present material risks to a company’s operations, finances or reputation, direc - tors must ensure adequate oversight and risk man - agement as part of their statutory duties under the Companies Act to exercise reasonable care, skill and diligence. A failure to address foreseeable AI-related risks may constitute a breach of these duties, poten - tially exposing directors to personal liability. This expectation mirrors regulatory developments, including the CMA’s own deployment of AI and machine learning tools such as the Machine Learning ESG Analyst. Collectively, these developments signal a transition towards more continuous, data–driven governance supervision in Kenyan capital markets. A significant development in this area is the introduc - tion of the Artificial Intelligence Bill, 2026 (the “AI Bill”), which had its first reading in the Senate on 2 April 2026. If enacted, the AI Bill will establish Kenya’s first
and succession planning. This evolution reflects a decisive shift away from “committee compliance” towards meaningful delegation of governance respon - sibilities coupled with accountability for outcomes. Board skills, succession and long–term effectiveness Boards are increasingly prioritising resilience and con - tinuity over short–term compliance. There is growing adoption of board skills matrices aligned with cor - porate strategy and risk profiles, alongside a greater emphasis on continuous professional development for directors, particularly in ESG, technology and capital markets regulation. Formalised succession planning for board leadership positions and key committee chairs is becoming more prevalent, signalling recogni - tion that governance quality is cumulative and directly correlated to sustained board capability. Board–level risk and internal control oversight Accountability, risk management and internal control emerged as the strongest–performing governance principle, achieving an 84.47% leadership rating. Boards are now directly and actively engaged in: • overseeing enterprise–wide risk management frameworks; • supervising the quality and independence of inter - nal and external audits; and • assessing internal control environments beyond financial reporting. The Companies Act requires directors to prepare annual reports that include a business review detail - ing the company’s principal risks and uncertainties, while the CMA Governance Code mandates that boards establish and regularly review the adequacy and integrity of internal control systems. Internal controls relating to compliance, ethics, data governance and operational integrity are receiving increased attention from the board. Cybersecurity and data protection, in particular, have become standing board agenda items, reflecting both accelerating digi - talisation and heightened regulatory exposure under the Data Protection Act, 2019 and the Data Protection (General) Regulations, 2021.
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