Barriers preventing quality ESG analysis in individual EMEA countries have been highlighted for the first time in a report by the UN-backed organisation Principles for Responsible Investment.
The 220-page report entitled ESG Integration in Europe, the Middle East, and Africa examined the strengths and weaknesses of ESG analysis in the Arabian Gulf, France, Germany, the Netherlands, Russia, South Africa, Switzerland, and the United Kingdom. The findings were based on a survey of 1,100 financial professionals around the world.
Corporate governance issues are typically analysed more commonly than other ESG issues in France, the Netherlands, South Africa and the United Kingdom, the research found.
Respondents in Germany, Russia, Switzerland, and the UK, meanwhile, said that a limited understanding of ESG issues throughout the market were a barrier to the further integration of sustainability approaches in these regions.
“The research shows that asset owners and investment managers should be working much more closely and sharing information on how and why they integrate ESG data into the investment process,” Fiona Reynolds, CEO of the PRI said in a statement accompanying the research.
“Investors and companies need to work together to promote the standardisation of ESG data.”
Despite previous fund manager claims to the contrary, the poll found that investors in the Arabian Gulf region typically did not discuss ESG issues relating to fixed income investments. The report said that investors ask “more questions about yields than sustainability.”
The level of sophistication for analysing ESG issues was rated as high in the Netherlands due to the level of understanding of impact investing techniques. The UK was also rated as “one of the most advanced markets” for integrating ESG into the investment process.
Those polled said that regulatory encouragement might be needed in Russia to stimulate wider take up of ESG analysis, while South Africa’s regulator was praised for its strict listing standards and ESG requirements.
The full report is available here.