ESG and Compliance: How Tanzania’s Legal Landscape Is Evolving for Sustainable Investment

1. Introduction — Why ESG matters more now

Investors across the globe are no longer asking if but how well businesses incorporate Environmental, Social and Governance (ESG) principles. In Tanzania, this shift is becoming legally significant: as local regulators, financiers and multinationals adopt global ESG norms, non-compliance will increasingly carry financial, operational and reputational risk.

For Tanzania, sectors such as mining, oil & gas, agribusiness, tourism and infrastructure—where foreign capital plays a large role ESG compliance is not simply a corporate affair; it is an integral part of legal strategy, governance and investment planning.

2. Tanzania’s ESG framework — the legal foundation

2.1 Environmental law

Tanzania’s principal environmental statute is the Environmental Management Act, 2004 (Cap. 191), which requires environmental impact assessments (EIAs) and audits for major projects.

Recent regulations under this Act include:

• Environmental Management (Control and Management of Carbon Trading) Regulations, 2022 (G.N. No 636 of 2022) providing a framework for carbon trading.
• A series of 2024 regulations:
  • Integrated Coastal Zone Management Regulations (G.N. 366 of 2024)
  • Right to Compensation Regulations (G.N. 367 of 2024)
  • Access & Benefit Sharing of Genetic Resources (G.N. 368 of 2024)
  • Environmental Performance Bond Regulations (G.N. 369 of 2024)

This evolving regime means projects must plan for environmental compliance not only at license-stage, but at post-closure, monitoring, and benefit-sharing stages.

2.2 Social & governance dimensions

On the “S” and “G” side, Tanzania doesn’t yet have a single consolidated “ESG Act”, but multiple laws address social rights, workplace safety, local content, transparency and corporate governance. For instance:

• The Dar es Salaam Stock Exchange (DSE) mandates sustainability disclosures for listed companies, aligned to global standards.
• The Association of Tanzania Employers (ATE) published a “State of Play” ESG report, illustrating that while awareness is growing, implementation among many firms remains weak.
• Extractive-industries regulation emphasises local content, community development and rehabilitation bonds.

2.3 Financial sector & disclosure

The financial sector is also adjusting: the Bank of Tanzania introduced “Climate Risk Guidelines” in 2022 requiring banks to assess climate risks as part of core operations.

As these requirements mature, companies will face more scrutiny not just from lenders but from investors who demand ESG-aligned risk management.

3. Drivers of change — why the urgency is growing

Several forces are accelerating ESG obligations and opportunities in Tanzania:

• Global investor expectations: Multinationals and development financiers insist on ESG compliance to justify project financing. ESG compliance is increasingly viewed as entry criteria, not optional.
• Regulatory reform: The Tanzanian government is aligning investment, environmental and natural-resource laws with global standards — for example in carbon trading, coastal zone management and genetic-resource frameworks. These reforms put new legal obligations on investors.
• Risk exposure: Non-compliance with ESG can trigger regulatory penalties, forced project shut-down, revocation of licence/permit, loss of investor confidence or expensive litigation. For example, environmental regulations now mandate performance bonds and post-closure rehabilitation.
• Competitive advantage: Projects with strong ESG credentials may secure better financing terms, access to green bonds or preferential investment deals. For example, one report shows Tanzania floated a green, social & sustainability bond in 2023.

4. Sector-specific implications for high-value investments

4.1 Mining, oil & gas

Extractives face heavy ESG exposure: land use, environmental impact, local-community rights, rehabilitation, emissions, etc.
Key legal considerations:

• EIAs and regular audits must be submitted under the Environmental Management Act.
• Projects may be required to provide rehabilitation bonds, comply with local-content laws, and engage in community-development obligations.
• Emerging carbon-credit regimes mean projects may need to integrate into regulated carbon-trading frameworks to benefit from or comply with climate-policy shifts.

From a legal strategy standpoint: contract clauses, monitoring frameworks and exit/closure provisions must include ESG risk mitigation.

4.2 Tourism & wildlife

In tourism (especially wildlife-conservation tourism), social and environmental dimensions are at the heart of value creation.
Legal opportunities:

• Conservation-linked tourism projects may qualify for green financing or preferential treatment if structured with sustainable community-benefit sharing.
• Brands tied to conservation (eco-lodge, community-run safari, carbon-offset tourism) require legal frameworks protecting land rights, community interests and environmental standards.

From an advisory angle: ensure property rights, community contracts, brand/IP protection, and ESG disclosures are all aligned.

4.3 Agribusiness & agriprocessing

With Tanzania’s push to develop agro-industries, ESG matters in supply chain, land-use, labour rights, chemical usage, biodiversity and sustainable certification.
Legal considerations include:

• Genetic-resources regulations (G.N. 368 of 2024) governing access/benefit-sharing for plant breeding and biotechnology.
• Sustainable land-management, local-community rights, traceability and export-certification frameworks.

In brief: agribusiness investors must integrate sustainability compliance, land-governance law and supply-chain transparency into their business model.

5. Actionable legal checklist for investors & project operators

Here’s a practical step-by-step plan:

1. Conduct an ESG legal readiness audit
   • Map regulatory obligations (environmental, social, local content, disclosure) relevant to your sector and project.
   • Identify gaps in existing compliance, contract terms, community-stakeholder frameworks and internal governance.
2. Update contracts and documentation
   • Insert ESG-linked representations/warranties in investment, JV, supply-chain and land-leases agreements.
   • Ensure community-benefit and local-content commitments are contractually enforceable.
   • For extractives: include rehabilitation bond clauses and closure/post-closure liability terms.
3. Integrate reporting & disclosures
   • If your business is listed or seeking financing, align with DSE sustainability disclosure requirements and IFRS S1 climate-risk rules.
   • Build internal monitoring systems (KPIs) for ESG compliance and prepare remediation plans.
4. Engage stakeholders proactively
   • Community and local-government engagement should start early; legal counsel can help design meaningful MoUs and stakeholder-engagement protocols.
   • For tourism and agribusiness: ensure land-title clarity, local partner contracts, and environmental permissions are in place.
5. Structure investment for sustainability advantage
   • Explore green-financing options (green bonds, sustainability linked-loans) as ESG credentials improve access to capital.
   • Build IP and branding around sustainability (eco-certification, carbon-credit mechanisms) to add value.
6. Ongoing legal monitoring & adaptation
   • ESG regulation in Tanzania is evolving. Monitor updates (e.g., carbon trading regulation, coastal-zone regulation) and adapt governance/compliance frameworks accordingly.
   • Keep internal legal teams or external counsel apprised of changes and ensure contracts include clause for compliance with future regulation.

6. Why Mak Africa Legal is your ESG legal partner

At Mak Africa Legal, we combine deep knowledge of Tanzanian legal frameworks with an international investment lens. Our ESG-focused services include:

• Legal audits of environment/social/governance risks.
• Drafting and reviewing contracts with ESG provisions, local-content clauses, and community-benefit frameworks.
• Advising on carbon-credit, genetic-resources, and sustainable-finance structuring.
• Supporting investor due diligence to ensure ESG compliance for financing and regulatory approval.
• Representation in regulatory matters, community-relations disputes, environmental-liability cases and local-content enforcement matters.

By aligning your investment with Tanzania’s evolving ESG legal landscape, we help protect your value, strengthen your brand and minimise regulatory or reputational disruption.

7. Conclusion — ESG compliance: the legal edge

In Tanzania’s emerging industries, ESG compliance will not be optional. It will become a foundational part of legal strategy, investment structuring and risk management. Projects that treat ESG as an add-on risk being sidelined; those that build ESG into their legal, operational and financing models will position themselves for durable success.
Let Mak Africa Legal navigate you through ESG compliance, legal structuring and the evolving regulatory environment — so you invest with confidence and thrive.

📧 info@makafrica.com
📞 +255 746 954 394

Mak Africa Legal – ESG-Aware Legal Excellence for Tanzania