Environmental, social and governance theme sees uptick in emerging markets

ESG (environmental, social and governance) theme has arrived in emerging markets, with a growing range of companies establishing ESG policies and targets.

Of the 140 companies that responded to a survey conducted by Bank of America (BofA) Global Research, more than 70 per cent had an ESG or sustainability policy in place. Also, nearly 87 per cent of companies in emerging markets (EM) said they were working with ESG scoring or rating agencies.

 

The push for ESG is being firmly established at the corporate level with ESG steering committees (or similar groups), firm key performance indicators (KPIs), specific targets, and more formalised data collection. Top environment-oriented responses included plans for reducing carbon emissions and water usage, as well as goals for increasing the use of renewable energy.

Among social factors, many companies cited health and safety measures, such as reducing accident rates and LTIFR (lost time injury frequency rate), as well as community-oriented programmes.

Governance issues related mainly to improved reporting and increasing gender equality in the employee structure.Despite challenges presented by ESG, a high proportion of companies monitor and report greenhouse gas emissions. Roughly half the respondents had conducted a climate risk assessment, and two-thirds of those who hadn't conducted one were considering it.