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Peter Newton Stower*1, Bessy Eva Kathambi2, Evans Ligare Chimoita3
1Department of Earth and Climate Sciences, University of Nairobi, Nairobi, Kenya.
Email: nywtonstower@gmail.com | ORCID: https://orcid.org/0009-0006-2986-1340
2Department of Earth and Climate Sciences, University of Nairobi, Nairobi, Kenya.
Email: bessyk@uonbi.ac.ke | ORCID: https://orcid.org/0000-0002-8826-2798
3Department of Agricultural Economics, University of Nairobi, Nairobi, Kenya.
Email: echimoita2011@gmail.com | ORCID: https://orcid.org/0000-0002-2764-4186
*Corresponding author
Journal of Policy & Governance, 06(01) (June 2026), 66-101. https://doi.org/10.33002/jpg060103
Received: 31 March 2026
Published: 29 June 2026
Reviewed: 26 May 2026
Accepted: 30 May 2026
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Environmental, Social and Governance (ESG) requirements are increasingly incorporated into Foreign Direct Investment (FDI) agreements; however, their environmental sustainability effects in emerging markets remain insufficiently understood. This study examines the extent to which ESG measures integrated through FDI are associated with quantifiable environmental sustainability outcomes in Kenyan firms, using the Knowledge-Attitude-Practice (KAP) framework. A mixed-methods design collected data from 150 portfolio firms and 63 fund managers in the manufacturing, agribusiness and infrastructure sectors. Findings indicate that the alignment of ESG safeguards with FDI requirements is associated with improved environmental awareness and planning. After FDI funding, 94.6% of firms became aware of their greenhouse gas (GHG) emissions and 73.3% developed emission-reduction plans. Environmental and Social Action Plans (ESAPs) were reported to be beneficial by 97.4% of firms, with 70.1% reporting more than 50% improvement in safety measures. In addition, 75.3% of firms adopted energy-efficient machinery, 73.3% reduced fossil-fuel use, and 85.1% improved waste recycling. However, only 20.0% reported improved water efficiency and only 23.3% adopted renewable energy solutions. The KAP framework helps explain how institutional ESG demands are associated with measurable environmental outcomes. The study contributes to ESG and global-investment research by connecting institutional requirements with reported sustainability gains in FDI-backed firms.
Keywords: ESG (Environmental, Social and Governance); Foreign Direct Investment; Knowledge-Attitude-Practice; Emission reduction; Sustainable investment; Corporate sustainability
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Stower, P.N., Kathambi, B.E. and Chimoita, E.L. (2026). Evaluation of the Environmental Sustainability Gains from ESG Integration in FDI-Backed Firms in Kenya: A KAP-Based Analysis. Journal of Policy & Governance, 06(01): 66-101. DOI: https://doi.org/10.33002/jpg060103
Stower P. N., Kathambi B. E., Chimoita E. L. Evaluation of the Environmental Sustainability Gains from ESG Integration in FDI-Backed Firms in Kenya: A KAP-Based Analysis. Journal of Policy & Governance, 2026, 06 (01), 66-101. https://doi.org/10.33002/jpg060103
Stower, Peter Newton, Kathambi, Bessy Eva, Chimoita, Evans Ligare. 2026. “Evaluation of the Environmental Sustainability Gains from ESG Integration in FDI-Backed Firms in Kenya: A KAP-Based Analysis”. Journal of Policy & Governance, 06 no. 01: 66-101. https://doi.org/10.33002/jpg060103
Stower, Peter Newton, Bessy Eva Kathambi and Evans Ligare Chimoita. 2026. “Evaluation of the Environmental Sustainability Gains from ESG Integration in FDI-Backed Firms in Kenya: A KAP-Based Analysis”. Journal of Policy & Governance, 06 (01): 66-101. https://doi.org/10.33002/jpg060103
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