The Potential Impact of EU's CSRD on Kenyan Farmers

Introduction

The European Union's Corporate Sustainability Reporting Directive (CSRD) has generated significant attention within the EU, but what about its impact on companies outside the EU? In this article, I explore how the CSRD extends beyond EU borders and its potential implications for Kenyan farmers.

CSRD's Global Reach

The CSRD introduces the concept of "double materiality," extending corporate responsibility beyond internal ESG practices. It compels companies directly affected by the CSRD to collect ESG data from individuals and institutions both upstream and downstream of their operations.

A Global Perspective: Dutch Farmers and Kenyan Farmers

To illustrate the CSRD's worldwide reach, let's draw a parallel with Dutch farmers who recently protested against stringent nitrogen emission reduction targets set by the Dutch government. The EU's environmental laws required a significant reduction in nitrogen pollution, primarily from livestock agriculture. Although Dutch farmers had been taking steps to reduce emissions, these changes were capital-intensive, making it challenging to achieve net-zero emissions quickly. Protests intensified when the government proposed accelerated reductions, leading to concerns of a disproportionate burden on farmers compared to other industries. While the government later revised its plans, the protests underscore the complexities of implementing ESG measures.

Implications for Kenyan Farmers

When the CSRD is enforced, EU companies purchasing Kenyan produce will be obliged to collect ESG data from horticultural aggregators. These aggregators, in turn, must obtain data from the farmers, creating a complex web of data collection.

Who Benefits from CSRD??

The crucial question is the downstream impact on Kenyan farmers. The intricate and potentially costly data collection process raises concerns about who can comply. While larger corporations may have the financial resources, it remains uncertain whether smaller local farmers can do the same. The CSRD may create a scenario where only financially robust entities can participate in the EU's horticultural supply chain. Consider the following issues:

• How many farmers use or can afford renewable energy?
• How many farmers meet the requirements of a diverse workforce?
• How many farmers can afford fair wages which going by ESG, would require to match the wages of large companies?
• How many farmers are members of WEF (since WEF members enjoy access to capital for fund managers or banks)?

Promoting a Conversation

The implications of the CSRD on global companies and Kenyan farmers raise critical questions about the purpose, fairness, and accessibility of ESG reporting. Considering that Kenya heavily relies on agriculture for economic growth, exports, and employment, the potential collapse of the agricultural sector could have widespread negative consequences. Ghana's tomato industry serves as a cautionary tale following the influx of low-cost tomato products.

In Conclusion

The EU's CSRD reporting requirements have a far-reaching impact, affecting companies worldwide and eventually reaching Kenyan farmers. It is imperative to engage in a thorough discussion to ensure that the interests of farmers are not overshadowed by the pursuit of ESG objectives.