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Stakeholders in Kenya’s export sector have raised concerns over the ripple effects of new European Union (EU) sustainability directives on trade.
The regulations, particularly the Corporate Sustainability Reporting Directive and Corporate Sustainability Due Diligence Directive, that came into effect in 2024 aim to tighten environmental, social, and governance (ESG) compliance across global supply chains.
While the EU is deliberating a proposal to merge these directives into a unified framework by 2026, Kenyan exporters are already grappling with the challenges of aligning with the current fragmented system.
Global Compact Network Kenya executive director Judy Njino highlighted the implications of the regulations.
“The EU has increasingly emphasized ESG matters in its quest to achieve a carbon-neutral Europe by 2050,” she said.
“While the EU’s focus on sustainability is commendable, these regulations often overlook the realities of African business models.
The regulations primarily target large corporations operating within the EU but also extend their influence beyond the bloc, impacting companies in supply chains linked to Europe.
For Kenyan exporters, this means meeting not only product quality standards but also adhering to stringent sustainability requirements throughout their production processes.
“Many exporters work with fragmented supply chains that include smallholder farmers, making compliance both complex and costly,” Njino said.
Kenya’s exporters find themselves in a challenging position as the regulations intersect with the implementation of the EU-Kenya Economic Partnership Agreement (EPA), which came into effect on July 1, 2024.
The EPA provides duty-free and quota-free access to European markets for key Kenyan agricultural products, including cut flowers, tea, coffee, fruits, and vegetables.
Despite this preferential access, data from the Kenya National Bureau of Statistics indicates a slight decline in Kenyan exports to the EU, from Sh38.34 billion in the second quarter of 2024 to Sh37.96 billion in the third quarter.
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