Introduction

The previous instalment unpacked the fragmented nature of Zambia’s ESG environment and the costs of piecemeal regulation. This continuation outlines practical reforms to achieve coherence and enforcement.

Regional lessons and institutional coherence

Building on global ESG foundations such as the IFC Standards, UN PRI and the Paris Agreement, Zambia must now translate these principles into enforceable standards and coordinated institutions.

Regional peers show how strong coordination can turn ESG from rhetoric into measurable practice. In South Africa, King IV Report on Corporate Governance embeds sustainability and ethical leadership as board-level duties, while the Johannesburg Stock Exchange’s sustainability disclosure guidance operationalises these principles.

Kenya’s ESG Manual and the Capital Markets Authority’s (CMA) reforms are steering listed companies toward mandatory sustainability disclosure. The Central Bank of Nigeria (CBN) has made environmental and social risk management integral to credit decisions. Zambia’s voluntary and fragmented ESG regime underscores that institutional leadership, coordinated regulation and disclosure anchored in financial and corporate governance systems are crucial to an effective ESG framework.

Learning from the EU model: coherence through law and classification

The European Union ESG architecture provides a benchmark for long-term integration. It’s comprised of:
the Corporate Sustainability Reporting Directive (CSRD) mandating disclosure of sustainability risks under double materiality; the EU Taxonomy Regulation defining what counts as sustainable activity; and the Sustainable Finance Disclosure Regulation (SFDR) requiring financial institutions to disclose how they integrate ESG factors. Together, these measures create clarity and accountability. While full replication is ambitious, Zambia’s collaboration with the EU on climate and green-economy projects provides a pathway: begin with disclosure, move to classification and end with unified legislation.

Sequencing reform: ISSB as the entry point

The starting point should be adopting the International Sustainability Standards Board (ISSB) framework. Unlike the EU’s developed model, ISSB standards IFRS S1 (general sustainability disclosures) and IFRS S2 (climate-related disclosures) are scalable and compatible with countries at different capacity levels. They fit naturally within Zambia’s accounting landscape since the Zambia Institute of Chartered Accountants (ZICA) and the Securities and Exchange Commission (SEC) already apply IFRS standards. Adopting ISSB will build reporting discipline, improve data quality and prepare institutions for integration with the EU system.

Building national coordination and a unified framework law

Zambia should create a national ESG coordination platform under the Ministry of Green Economy or jointly with Finance to align fiscal and policy goals. The platform should convene the Zambia Environmental Management Agency (ZEMA), Securities and Exchange Commission (SEC) and Lusaka Securities Exchange (LuSE) as initial core institutions. Their cooperation would harmonise reporting templates, monitoring systems and enforcement mechanisms an essential first step toward coherence.

Thereafter, Zambia should codify a unified ESG Framework Law or Policy, consolidating the scattered provisions across existing laws. This framework would mandate standardised sustainability reporting for all listed entities, introduce a national sustainability taxonomy aligned to green finance priorities, establish clear monitoring, verification and enforcement procedures including mandatory publication of ESG reports and penalties for non-compliance and create incentives for high-performing companies.

Enforcement, monitoring and market alignment

Although ZEMA and SEC possess enforcement powers, action remains fragmented and reactive, often triggered by specific incidents rather than continuous oversight. ESG compliance must evolve from aspiration to an auditable, proactive system.

ZICA’s adoption of IFRS S1 and S2 sustainability-disclosure standards provides a credible anchor. This establishes a baseline for regulators like ZEMA and LuSE which should integrate ISSB-aligned metrics into their respective mandates. These standards should be implemented through uniform templates, digital submissions and periodic compliance reviews, with emphasis on the weaker “S” and “G” pillars measuring labour practices, gender diversity and board accountability.

CBN enforces its Sustainable Banking Principles through detailed templates and supervisory reviews, applying fines or operational limits to non-compliant banks. Similarly, CMA enforces stringent disclosure for listed companies, where public naming of non-compliance acts as a strong market deterrent affecting capital access. Zambia can replicate this discipline through a tiered sanctions-and-incentives regime: administrative fines, suspension of permits, or capital-market restrictions balanced by rewards for verified high performers.

Monitoring should rely on a shared ESG dashboard where ZEMA, SEC, LuSE and ZICA publish annual performance reviews and company progress reports. Compliance should also be linked to market levers expanding green-bond rules into a national taxonomy. This would transform ESG from a voluntary gesture into a binding business standard attracting sustainable capital and building resilience.

In conclusion, Zambia can adopt proven frameworks leadership, credible reporting, enforceable laws, and market-aligned incentives. Starting with the ISSB baseline and a unified ESG framework can transform fragmentation into sustainable investment and social protection.

About the Author:

Lucy P. Musonda is an Advocate of the High Court of Zambia (AHCZ). She currently serves as a Legal Researcher at the Centre for Trade Policy and Development. She holds an LLB from the University of Zambia and is currently pursuing an MBA at Heriot-Watt University, Edinburgh Business School, as well as a Master of Laws (LLM) in Taxation and Investment Law at ZCAS University.