ESG as a catalyst for business success in Tanzania: New ATE study highlights the path to sustainable growth
Association of Tanzania Employers
The Association of Tanzania Employers (ATE) is the most representative Employers Organisation in Tanzania formed in 1960
As the global business environment shifts towards sustainability and ethical governance, Tanzanian companies are increasingly recognising the competitive advantages of adopting Environmental, Social, and Governance (ESG) practices. A new study supported by the ILO Bureau for Employers’ Activities (ACT/EMP) Activities’ LEADER project and the Association of Tanzania Employers (ATE) emphasizes that to fully unlock the business benefits of ESG, the Tanzanian business community needs a fit-for-purpose policy and legal framework, a shift in mindset, and enhanced support for ESG integration
Sustainability is good for our companies and our country
The business case for sustainability is undeniable: sustainable businesses perform better. A growing body of research clearly shows the business benefits of adopting ESG standards. Investors, consumers and governments are also increasingly looking for business sustainability.
Changes in international regulatory standards also mean that ESG requirements on businesses are on the up. From stock exchanges around the world incorporating sustainability standards in reporting to European Union regulations affecting supply chains worldwide, sustainable practices are increasingly becoming part of the business landscape.
Zooming in on our own country, Tanzania is one of Africa's fastest-growing economies, with vast potential in sectors such as agriculture, mining, tourism, and manufacturing. However, like many countries, we face challenges such as climate change, resource scarcity, and social inequality. ESG frameworks can help our companies respond to these challenges by embedding sustainability into the heart of their operations, improving business resilience in the long term.
Going beyond the benefits of sustainability at the enterprise level, ESG also presents an opportunity for companies to contribute to the wider progress of our country. Tanzania’s National Development Vision 2025 outlines the country's ambition to become a middle-income country driven by sustainable growth and development. Its three principal objectives are achieving quality and good life for all, good governance and the rule of law, and building a strong and resilient economy that can effectively withstand global competition. By adopting ESG practices, our businesses can play a key role in supporting this vision and continue to make contributions towards the Sustainable Development Goals.
Many of Tanzania’s businesses are not yet unlocking the full potential of ESG
The ATE and the ILO are working together to help Tanzania’s businesses make the most of the ESG opportunities on offer. The first step in our collaboration is a new study on the sustainability needs of our business community, which included 30 interviews with representatives of enterprises of all sizes across all sectors.
The major finding of the study is that a major culture shift is needed. Many of our country’s businesses are not yet realizing the potential benefits of ESG. They perceive sustainability practices as an additional cost, which can be hard to bear given existing regulatory and bureaucratic pressures. It is time to embrace ESG and realize the benefits it brings.
The study also shows that while there is ample government regulation on sustainability, which has been much improved over the last few years, this is often not coordinated and can be disjointed. For example, while to a large degree, we have the policy and legal frameworks we need on ‘E’, ‘S’, and ‘G’, these standards are often considered separately and are not linked up. This makes it harder for businesses to integrate ESG practices across the board.
Contrary to the policy environment, Tanzania’s businesses often understand ESG as a block and are not always able to unpick the actions necessary under each standard. Large companies are generally in a better position here than smaller, national businesses. Moreover, sectors that are subject to more sustainability regulation (such as agriculture, extractives, financial/banking, tourism, and industry/manufacturing) have adopted ESG standards to a larger degree than those sectors where ESG practices are voluntary.
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Next steps for Tanzania’s businesses and the ATE
The ATE, with support from the ILO and other social & development partners, will take a two-pronged approach to driving ESG. Firstly, we will be rolling out a new training package for employers. This will include a basic introduction to ESG, as well as more technical modules on how to adopt ESG standards, how to collect relevant data, and how to report. The training package will be rolled out together with an online information platform for all ATE members with basic information on ESG and how to integrate it, as well as good practice case studies.
Secondly, the ATE will be advocating for a comprehensive, business-friendly government approach to ESG. We need legal and policy frameworks that effectively enhance business performance without adding additional burdens. This includes, for example, developing local standardized ESG reporting frameworks that are simple to use and fit the Tanzanian context.
The future is bright, the future is sustainable
In conclusion, adopting ESG practices is not just a strategic decision for businesses in Tanzania - it’s a critical one. The benefits are clear: access to markets, cost efficiencies, alignment with regulatory standards, and enhanced resilience. As Tanzania continues its journey toward sustainable development and economic transformation, businesses that prioritise ESG will secure their own future success and contribute to the country's long-term goals.
We at the Association of Tanzania Employers are here to support our businesses every step of the way. Are you an ATE member and would like more information on ESG support? Then please contact Albert Rukeisa via +255683932308.
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