Climate risk has become, and continues to be, a key item on the global agenda, with many countries reaffirming their commitments to the various agreements to which they are signatories. Its significance is no longer being dismissed; instead, it has emerged as a critical topic of discussion across all sectors.

Kenya has been at the forefront in honoring its commitments to the Paris Agreement and aligning itself with Net Zero pledges. This commitment is exemplified by the Central Bank of Kenya’s bold directive requiring all banks to report on their climate-related risks, with institutions given an 18-month window to comply with the regulation.

Climate Risk Disclosure

Before exploring what Climate Risk Disclosure entails, it is essential to first understand what Climate Risk is, how it affects all sectors, and why organizations—both public and private—must play a role in supporting the transition to a low-carbon economy. Climate Risk refers to the potential negative impacts of climate change on economic, social, and environmental systems.

Disclosure refers to the structured reporting of climate-related risks and opportunities, including governance, strategy, risk management, and metrics, often guided by global frameworks like TCFD or ISSB. Therefore, Climate Risk Disclosure is a key tool for enhancing transparency, enabling informed decision-making, and aligning organizational practices with broader sustainability and climate resilience goals.

The Net Zero Pathway

Net Zero Pathway is a roadmap that outlines how organizations or entity plans to achieve net zero emissions by reducing emissions to the lowest possible level and balancing any remaining emissions with offsets.

It includes actions that an organization will put in place to reduce their environmental impact, meet climate goals and build resilience. It serves as a strategic guide for aligning operations with global climate goals.

Nationally Determined Contributions (NDC’S)

NDC’s are generally referred to as climate actions submitted by countries under the Paris Agreement. They outline how each country intends to reduce GHG emissions as well as adapt to climate change.

NDC’s typically include national targets for reducing GHG emissions, strategies for climate adaption,  implementation roadmaps for achieving this and progress tracking mechanisms for monitoring progress.

Aligning Climate Disclosures with Nationally Determined Contributions

The private sector plays a critical role in achieving national climate targets by investing in low-carbon technologies and developing innovative solutions that build resilience within their operations. Their contributions range from mitigation efforts such as investing in renewable energy and energy-efficient technologies to adaptation strategies like building climate-resilient supply chains.

These efforts are made possible through the establishment of a supportive regulatory and policy environment that encourages and promotes sustainable practices across industries.

Benefits of Integrated Climate Disclosure for ESG and Policy Alignment

Integrated climate disclosures offer numerous benefits, including improved access to green finance and increased investor confidence. They also foster alignment between corporate and national climate ambitions, enhancing sustainable competitiveness.

Strong alignment with Environmental, Social, and Governance (ESG) standards leads to higher ESG ratings, which in turn improves access to financing for green projects. This dual benefit—environmental impact reduction and positive financial performance—demonstrates the strategic importance of integrated climate disclosures.

Challenges and Gaps in Current Disclosure Practices

Despite the growing momentum, several challenges hinder full alignment between corporate disclosures and national goals. One major issue is the variety of existing frameworks, which can make it difficult for organizations to determine the most suitable one.

Standardization remains a key concern, especially when aiming to meet both national and global reporting requirements. Additionally, data quality issues pose a challenge—particularly for organizations that lack the capacity or technical know-how to gather and report reliable climate data.

These gaps highlight the urgent need for increased awareness, capacity building, and technical support to ensure all stakeholders understand their roles and are equipped to overcome emerging challenges.

Future Outlook: Driving Transparency for Climate Accountability

The future of climate disclosures is promising, with increasing momentum toward mandatory reporting regimes. Technological advancements, particularly in artificial intelligence, are significantly enhancing data collection and reporting processes.

Stakeholder engagement is also becoming a cornerstone of effective climate governance and policy development. As collaboration between the public and private sectors strengthens, we can expect more transparent, accountable, and aligned climate action moving forward.

Conclusion

The journey toward a climate-resilient, low-carbon future demands more than isolated efforts. It requires a seamless integration of climate risk disclosures, net-zero targets, and Nationally Determined Contributions (NDCs). Climate disclosures provide the data foundation that enables manage, and mitigation of climate-related risks. These disclosures also inform more credible and science-based net-zero strategies by identifying emission hotspots and transition risks across value chains.

Simultaneously, aligning corporate action with national NDCs ensures that private sector contributions are reinforcing, not conflicting with, government climate commitments.

When properly aligned, disclosure, net-zero pathways, and NDCs create a virtuous cycle of transparency, accountability, and climate ambition that can accelerate global progress toward a sustainable future.

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Article by Shalon Amunga, ESG Associate