China, Egypt and Vietnam worst for ESG investors
GLOBAL - Among leading emerging market economies, China, Egypt and Vietnam have performed the worst in terms of environmental, social and governance (ESG) indicators, according to responsible investment research specialist EIRIS.
The three best-performing emerging market countries were South Korea, Brazil and Mexico.
Both Mexico and Brazil scored higher on environmental indicators than Canada and the US, showing it is possible for emerging markets to experience rapid growth and mitigate ESG risks, EIRIS said.
Carlota Garcia-Manas, co-head of research at EIRIS, said: "The poor performance of China, particularly in the area of governance, but also scoring low on environmental indicators, should be of particular concern to investors, given its economy is due to overtake the US as the world's largest over the next 20 years."
Of all 68 countries surveyed on the 49 environmental, social and governance indicators, the three best performers were Sweden, Austria and Switzerland.
EIRIS's research followed hot on the heels of the country rating published by Munich-based oekom research AG, a global service providers on the sustainable capital market.
As in previous years, the top positions were held by the Scandinavian countries, followed by Austria in fifth place.
Germany came in seventh, while the US continued to languish in 40th.
South Africa ranked 50th out of the 50 countries evaluated.
Oliver Rüdel, research director at oekom research, said: "South Africa is the only African country included in our country rating.
"This time, it has come in at the bottom of the table, demonstrating it has a considerable amount of catching up to do in implementing sustainable development.
"Investors currently view South African government bonds as stable, and the risk/return ratio is seen as being acceptable.
"However, anyone wishing to invest money in ways that take environmental and social issues into account should be very cautious where South Africa is concerned."
Inefficient use of resources and high CO2 emissions, inadequate attention to human rights and serious failings in terms of safety, the state of the labour market and education are just some of the numerous shortcomings revealed by oekom research's analysis of South Africa's sustainability performance.
The forced resettlements that have taken place during preparations for the World Cup have also given rise to criticism.
Oekom research's country rating covers the EU member states, the OECD countries and other major economies in Asia and eastern Europe and comprises 150 social and environmental indicators.
The 2010 version of the EIRIS Country Sustainability Profiles for investors in sovereign wealth bonds includes a comparison of those emerging market countries that will play a key role in driving global economic development over the decades ahead.
The countries analysed for the comparison were Brazil, China, Egypt, India, Indonesia, Mexico, Pakistan, Philippines, Russia, South Korea, Turkey and Vietnam.