It is always encouraging hearing about positive developments on environmental, social, and governance (ESG) research, reporting, or investing activities on the African continent.

Few weeks ago, the Social Investment Forum (SIF) published a press release to mark the publication of their 3rd report focusing on emerging markets:  “Corporate Sustainability Disclosure in Emerging Markets.” The article explained that “Few Companies in Emerging Markets Offer Comprehensive “ESG” Reporting; Brazil and South Africa Stand Out as Exceptions1.”

Since the divestment movement to end the apartheid regime, the responsible investing community has had a unique relationship with South Africa. Now that the country’s economy is one of the strongest on the African continent, it is great to see that it is also one of the emerging markets identified by SIF offering comprehensive ESG reporting.

 “The report’s major country-specific findings included:

    • Companies from South Africa exhibited the best overall transparency practices, while firms from China, India, Indonesia and Mexico lagged. 
    • South Africa was the only country with all of its companies in the study’s universe reporting some form of ESG data, while India had the highest rate (40 percent) of companies disclosing no form of ESG information.   
    • Companies from Brazil and South Africa were among the most likely to issue reports using the GRI’s guidelines, with five firms each from Brazil and South Africa doing so2.” 

As explained by Mike Lombardo, Senior Analyst at Calvert Investments, these strong ESG reporting practices in South Africa are fueled by the presence of the Johannesburg Stock Exchange (JSE), a South African stock exchange operating a socially responsible investment index where the top 40 companies (by market capitalization) are required to report ESG information.

These South African efforts through JSE have also been recognized in an allAfrica.com article in December, 20093.  According to the JSE index head, "[t]his year [2009] we have the highest number of constituents in the index's history," further confirming the rise of ESG practices in the country.

These ESG reporting practices are also helping investors engage with South African companies. Government Employees Pension Fund Investment and Actuarial head John Oliphant for example said "that they planned to use the index data as a basis for engaging with listed companies in which the fund was invested. ‘The time is ripe for companies and investors alike to realise that sustainability is now a non- negotiable, and for the focus to shift from short-term profits to building true shareholder value in the longer term’4.”

This is another example showing that, with the support of organizations such as AfricaSIF promoting ESG practices and reporting there will be a higher potential for many more African companies to benefit from responsible investing.

RY

To read the full Social Investment Forum press release, please go to: http://www.socialinvest.org/news/releases/pressrelease.cfm?id=149

To read the full allAfrica.com article, please go to: http://allafrica.com/stories/200912010554.html