The Centre for Affordable Housing Finance in Africa(CAHF) entered into a partnership with the Reits Association of Kenya(RAK) and is pleased to provide a blog series on housing and housing finance. 



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Envisioning resilience and sustainability in planning for urban areas has been an evolving concern for rational change. Environmental conservation, social justice and collaborative governance have recently been areas of focus for most institutions in the real estate sector. An increased number of real estate firms are continually embracing the Environmental, Social and Governance (commonly referred to as ESG) concept as the right way to go and towards the premise of doing the right thing. Real Estate developers and investors are adapting to ESG to positively impact their profits and shareholding while also considering the impacts of their development on the environment, their employees, and their clients.

Environmental social governance is a measure of an entity’s sustainability, based on those three central factors alongside the company’s financial performance. The ‘E’ stands for the environment representing what sustainability efforts a company is making in its developments. The ‘S’, social aspect of ESG, considers a development company’s relations with its employees and the local community which their development impacts. ‘G’ for governance is elaborated as the process in which a development company is run. This could be in terms of gender-inclusive policies, disability inclusiveness and the structuring of a company’s administrative board.


It is becoming increasingly important to understand and pursue ESG implementation in real estate projects world-over as investors grow more concerned with the environmental and social impacts of their projects. While developers must ensure environmental and social sustainability criteria are adhered to from the sourcing of materials, building designs and building technology, human resources, and external social and environmental impacts of their developments. ESG Property Certification should also lead to higher property values as it also provides the potential for future mandating and regulation as it is intended to become an area of focus for most governments around the globe. Non-Governmental bodies have also lent their voice to the ESG discourse, with the United Nations recently launching its 2030 Agenda for Sustainable Development. This speaks to the measures and targets of sustainability that countries around the world should aim at to protect the environment and the people.


How can investors and developers ensure that their developments and assets are ESG compliant? This remains to be the biggest challenge for ESG as it is still not a mandatory requirement for real estate developments. In Kenya, various policy and legislative documents speak to sustainability within the Real Estate Sector. Some of the documents which propose mandatory disclosure of social and environmental impacts to be used in the measure of ESG include: The Environmental Management and Coordination Act (1999); Occupation Health and Safety Act (2007); and the Consumer Protection Act (2012). Policies that companies use to benchmark ESG include the Kenya National Climate Change Action Plan, IFC Performance Standards on Environmental and Social Sustainability, UN Sustainable Development Goals, and the Global Reporting Initiatives Standards.


Globally, there are a few standard measures of ESG such as LEED (Leadership in Energy and Environmental Design) Certification, IFC Edge Certification and GRESB (Global Real Estate Sustainability Benchmark) Certification. Despite not having a set of country-specific criteria to rank ESG, local real estate companies such as Centum are ranking their developments off the International Finance Corporation (IFC) Performance Standards on Environmental and Social Sustainability coupled with the UN Sustainable Development Goals. Additionally, in the positive direction, the Architectural Association of Kenya has begun efforts to roll out a set of country-specific guidelines dubbed “The Safari Green Building Index tool”. It prescribes a set of categories and rating systems to assess construction projects so as to establish their environmental performance. The Nairobi Securities Exchange (NSE) also recently launched its ESG Disclosure Guidance Manual with an aim to improve and standardize ESG reporting among listed companies in Kenya. Guided by the Global Reporting Initiative Standards of 2021, the NSE Guidance manual spells out the various categories and measures of performance listed companies in various sectors should use to report on their ESG compliance.

Environmental conservation, social justice and corporate governance is foreseen to promote a holistic approach not only within real estate development but also as a key consideration in ensuring both industries and the economic global markets adopt a holistic approach in their undertakings. The United Nations, for instance, launched Sustainable Development Goals as part of the 2030 Agenda for Sustainable Development. In Kenya, this position is no different; regulators are pushing for ESG compliance to be mandatory. But industry players are already taking matters into their own hands to ensure they meet ESG standards.



Buildings such as Dunhill Towers in Westlands have been certified as a green building by the World Green Building Council through the South African Green Building Council. The sustainability factors that the building adheres to include natural ventilation and natural lighting within the building and minimizing water usage. Photo-voltaic (PV) Panels on the building allow for sustainable electricity generation. Water closets, urinals and tape fixtures all reduce water consumption. Paints, adhesives sealants and carpets have low volatile organic compounds (VOC) emissions.


Centum Real Estate (CRE) is a leading homes developer and a brand with a current presence in Kenya and Uganda. CRE’s product portfolio covers a wide range of affordable, mid-market and high-end homes in large mixed-use master-planned communities, with a focus on affordable and mid-market housing. CRE measures its adherence to ESG standards based on the IFC Performance Standards of Environmental and Social Sustainability. On an environmental front, Centum ensures that they incorporate the use of renewable sources of energy to an optimal extent as possible. For instance, at their Two Rivers Mall project, they have established a 1.2MW Solar plant which is envisioned to expand to 8MW to meet energy requirements at the development site.

Figure 1: Solar power plant at Centum’s Two Rivers Development

Source: Centum Real Estate (

They also incorporate a sewer treatment plant within all their developments to promote water recycling. The Two Rivers water supply system is designed to meet a demand of 2000 m3/day at full development. Treated wastewater capacity stands at 1800m3/day. As part of their social responsibility, they have also provided water to Githogoro residents from the Two Rivers Water Company since the onset of the COVID-19 pandemic, this is now approximately 40,000 liters. They also enforce a 30% greenery standard in Two Rivers to avoid the concrete jungle concept.

Figure 2: Water treatment plant

Source: Centum Real Estate (

The building designs of their developments are also IFC benchmarked. On a social front, they also invested in the communities where their developments are. They have in turn created employment for the locals in the area, they have refurbished 10 schools in Vipingo and generated an education fund that supports over 200 scholars annually. During the COVID 19 crisis, they also endeavored to distribute food to vulnerable communities.


Financing strategies toward sustainable real estate development include the Kenya Green Bond Framework. This framework is intended to increase mobilization of green sustainable financing aligned to Green Bond Principles. The Green Bonds Programme Kenya, which is an initiative of the Kenya Bankers Association (KBA), the Nairobi Securities Exchange (NSE), Climate Bonds Initiative (CBI), Financial Sector Deepening (FSD) Africa and FMO – Dutch Development Bank, aims at developing a domestic green bond market. Regulations on REITs in Kenya are also impactful towards the development of ESG compliant green buildings as evidenced in Acorn Holdings listed REITs. Acorn Holdings, a Kenyan development company has also received GRESB certification for their Purpose Built Student Accommodation REITs. In addition to that, they have also received Green Certification from the Climate Bonds Initiative for their Acorn Green Bonds.


One of the negative biases towards ESG that have stalled its uptake is that it is perceived to increase the cost of development. This cost could be quantified as financial and in terms of time. It would then be prudent if industry players would define how costs can be reduced while still ensuring sustainable developments. Another major challenge of ESG within the Real Estate Industry is the inability to fully quantify the benefits of ESG on development in relation to the rate of return. The social aspects are usually easier to quantify and qualify for the directly benefiting communities or the staff members although it does not directly translate to a quantifiable benefit for the investor or the developer. However, seeing as ESG seeks to promote responsible investing and development, this then remains to be a valuable criterion of assessment. If ESG can be seen to contribute to the cost, revenue, or profit of any company then it certainly can be termed as a beneficial value driver within the real estate sector. Although it may be difficult to undo what has been done in the past without ESG compliance, we can always look forward to ensuring sustainability. However, repurposing and regenerating previous developments could potentially remedy any negative impacts that buildings may pose environmentally and socially.


ESG in the Real Estate industry can be summarized as working progress towards the achievement of responsible development and investment, seeing as no development occurs in a vacuum. Most stakeholders: government organizations, non-governmental organizations, private developers, and other industry players; are all focused on adopting more sustainable and resilient transitions within the Real Estate Sector. This is because real estate projects provide a wide range of benefits to the public and a call for the real estate sector to focus on environmental conservation, social justice and good governance is evolving. Identifying and understanding the impacts of ESG is not only in line with quantifiable profits but also on the intangible environmental and social impact aspects.


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  2. Babu, B. Tools for Green Design. Presentation, Architectural Association of Kenya. (Babu, n.d.)
  3. Cajias, M., Fuerst, F., & Nanda, A. (2011). Is ESG commitment linked to Investment Performance in the Real Estate Sector?. Do Responsible Real Estate Companies Outperform Their Peers?. Retrieved 19 April 2022, from. (Cajias et al., 2011)
  4. Deloitte, (2021). Real Estate Predictions 2021. The Impact of Social Good On Real Estate ESG As A Value Driver For Real Estate.). (Deloitte, 2021)
  5. Duggan, A., & Goatman, D. (2021). ESG is set to be the biggest investment driver in Africa in 2021. Knight Frank.
  6. EPRA, (2020). EPRA measuring the ESG impact on listed Real Estate Performance. An Analysis of EPRA’s BPR Database. Retrieved 19 April 2022, from. (EPRA, 2020)
  7. Freshfields Bruckhaus Deringer, ESG and Real Estate. Effects of The Sustainable Finance Disclosure Regulation And The Taxonomy Regulation On The Real Estate Industry. Retrieved 19 April 2022, from (Freshfields Bruckhaus Deringer, n.d.)
  8. Kenya, Government of. (1999). Environmental Management and Coordination Act, (No 8 of 1999). (Government of Kenya, 1999)
  9. Kenya, Government of. (2007). The Occupational Safety and Health Act, OSHA (2007). (Government of Kenya, 2007)
  10. Kenya, Government of. (2012). Consumer Protection Act, (2012). (Government of Kenya, 2012)
  11. IFC World Bank, I. (2012). IFC Performance Standards on Environmental and Social Sustainability. Retrieved 19 April 2022, from. (IFC World Bank, 2012)
  12. Nairobi Security Exchange ESG Disclosure guidelines. (2021) (4th).(Nairobi Security Exchange ESG Disclosure guidelines, 2021)
  13. Ndurie, J. (2021). New Index to Evaluate ‘Green Buildings’ in Kenya. In: Construction Kenya. Nairobi.

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