The first edition theme
“Environmental, Social and Governance (ESG) Investments in West and Central Africa’’
In order to filter various projects, investment companies and socially conscious investors use a set of standards, criteria and company management rules gathered under the ESG label, an acronym for environmental, social and governance investments.
We strongly believe that ESG investments in Africa should be promoted and encouraged. Strangely, although it is the continent that needs it the most, it is also the continent that least considers ESG criteria and standards. In order to position itself in the long run to receive both financial and human contributions necessary for its growth, Africa needs to aggressively implement ESG in order to increase its presence in the portfolios of private and public fund managers.
Several regions of the world compete to receive funding from various investment funds. In spite of their potential and attractiveness, some African countries have a reputation of suffering from endemic corruption and an unfavorable business climate. To position itself to receive funds that would be welcome, it is imperative to educate the entrepreneurial consist on the international standards of transparency, reporting and diversity.
The investment impact, the global well-being of stakeholders, communities and the environment are now combined with business performance, profit and returns. It would be suicidal to ignore it – and Africa will only further alienate itself if she behaves as if certain forms of corporate governance are non-existent.
The West and Central Africa Investment Summit aims to promote, educate and contribute to the implementation of an ESG ecosystem of a business genre in Central and West Africa. These pages particularly introduce certain points that would strongly be at the center of round tables, debates, conferences, workshops and company presentations in some African countries.
Generally, ESG compliance requires continuous effort and constant improvement. These pages and this Summit are intended to irreversibly launch a dynamic “way of doing” which African organizations greatly need. Each environmental, social and governance standard requires special attention.
Environmental
The environmental criteria can include policies related to the business climate, energy consumption, waste, pollution, the conservation of natural resources and the treatment of animals. ESG factors can also be used to assess the environmental risks a company may face and how it manages those risks. These factors may include direct and indirect greenhouse gas emissions, toxic waste management, and compliance with international and domestic environmental regulations.
Social
Social aspects examine the company’s relationships with internal and external stakeholders. Does the company donate a percentage of its profits to the local community or does it encourage employees to volunteer? Do the working conditions take into account the health and safety of employees or does the company derive an unethical benefit from its customers?
We are looking for companies that promote ethical and socially conscious issues, including ethnic and racial diversity, inclusion, community orientation, social justice and business ethics, in addition to fighting racial, sexual and gender discrimination.
Governance
ESG governance standards ensure that a company uses accurate and transparent accounting policies, seeks integrity and diversity in the selection of its leaders, and is accountable to its shareholders. ESG investors can demand the assurance that companies avoid conflict of interest in their choice of board members and senior executives, that they do not use political contributions to obtain preferential treatment, and do not conduct themselves illegally.
The adoption of the ESG criteria is increasing through institutions and fund managers
Within the space of three (03) years, the percentage of international financial institutions and organizations that adopt ESG criteria has increased from 65% to 77%. These financial institutions include portfolio and fund managers who administer investment platforms within private banks, brokers and other international financial actors.
Savers require investment impacts
It is important to note that more and more manager funds are only responding to their clients’ requests who require that assets be directed to support specific causes dear to them.
In essence, impact strategies aim to achieve financial outburst and/or contribute to solving societal challenges. Financial performance does not exclude the resolution of societal challenges. Investors would also like to have a say in the management of the funds they entrust to financial institutions.
In general, investors evoke a multitude of motivations for ESG integration
- 57% Align investment strategies with organizational values
- 34% Reduce global risk
- 26% create a better world
- 17% benefit from new diversification sources.
Today, financial institutions no longer consider ESG investments as something imposed on them. They now believe that this type of investment is linked to their role within the organization and their mission as an investor. Beyond the alignment of values, it is acknowledged that ESG criteria can influence the behavior of companies.
In this context, it is generally accepted that influencing corporate behavior can be about encouraging companies to improve their ESG practices on issues about encouraging them to improve their financial performances.
On a global scale, financial advisors who are the main investment influencers, indicate that 16% of client assets are invested in ESG strategies. The countries with the highest level of investments are Germany, where advisors report that 36% of client assets are invested in ESG, France, where it is 29%, and Switzerland where it is 27%. We then begin to understand the vital necessity for African countries to comply with ESG requirements.
