Environmental, Social and Governance (ESG) State of Play in Uganda: Awareness, Practices, Risks and Opportunities

The Federation of Uganda Employers conducted this survey to ascertain ESG state of play in Uganda. The survey provided key insights regarding the ESG landscape in Uganda with strategic focus on ESG regulatory framework, perspectives of employers on ESG risks and opportunities, what pressures Ugandan firms feel about ESG, whether financial institutions are offering better terms to firms with reduced ESG risk profiles, the current potential needs of FUE members to respond to ESG and how ILO ACCEL and PROSPECTS projects can support Ugandan firms decrease ESG risks and promote opportunities for positive impact. The survey adopted qualitative research methods which included use of extensive desk research on related ESG existing information, online survey questionnaire through Qualtrics, and semi-structured key informant interviews administered to FUE targeted members. The respondents were top Chief Executive Officer’s, board members or senior business leaders from within the FUE membership, key sectoral associations, current ESG services providers, financial lenders and banks, banking association, impact investors, Uganda Security Exchange, Senior Ministry Officials, academia and think tanks. Data was analysed using both qualitative and quantitative techniques, identifying trends, patterns, themes and key insights on ESG within the Uganda business landscape.

According to the Sustainable Development Report of 2024, it was established that Uganda’s SDG performance is at 56.1 percent, slightly above the regional average at 53.7 percent, and that Uganda is ranked number 142 out of 167 countries in Sub Saharan Africa. Thus, this survey observed a rapidly evolving ESG landscape in Uganda, driven by domestic and international commitments and that ESG is becoming a major force that is shaping business decision making. However, ESG awareness and understanding remained low among businesses, only 27 percent of the respondents had a good understanding of ESG. The survey recognized that while Uganda has existing planning and policy frameworks that support implementation of ESG pillars, there was limited trace of sector specific ESG frameworks except for the banking sector. Nearly all production and services sectors were noted to face ESG associated risks that could result into legal liabilities, financial losses, supply chain vulnerabilities, reputational damage, business disruptions, regulatory fines, climate change, and, loss of talents. 8 percent of the firms surveyed experienced high ESG pressures from suppliers and customers and 79 percent of the ESG connected pressure was due to demand for social responsibility.

The study observed almost no better terms from financial institutions in Uganda for firms that currently demonstrate reduced ESG risk profile, as many financial institutions focused more on collateral security, revenue and profitability as major determinants for credit assessment. The study suggests for the development of an ESG policy and strategy framework to guide decisions on ESG services among Ugandan entities. Understanding sector specific ESG needs, leveraging on distinct FUE competencies of research, advocacy, training and wide multi-sector membership, adoption of value based ESG marketing approach and collaboration with ILO ACCEL and PROSPECTS towards ESG research, policy, and education are additional strategic actions to increase ESG services in Uganda. This report is expected to contribute informative and valuable ESG insights to FUE, businesses, policymakers, and investors for enhanced ESG services and business sustainability in Uganda.