2024 Sanlam ESG Barometer: navigating the changing dynamics

The environmental, social and governance (ESG) landscape has changed dramatically since the launch of the inaugural Sanlam ESG Barometer last year.

This pioneering annual report — researched by Krutham and presented in partnership with Business Day — evaluates the current state of ESG and assesses how listed companies are changing their businesses to deliver improved ESG outcomes that will benefit society in the long term.

The evolution of global and local ESG dynamics presents an interesting backdrop for the 2024 edition of the report, which comes at a time when contrasting movements are shaping the future of sustainable investing.

In the US, a rise of anti-ESG sentiment has led several Republican-controlled states to restrict state funds from incorporating ESD considerations into investment decisions.

While this has been framed within the US’s ideological and political divide, citing that ESG promotes a “liberal” agenda, other criticisms highlight economic risks — including potential job losses in fossil fuel sectors crucial for some regions' economic stability — and financial concerns about ESG investments potentially underperforming due to limited diversification and exclusion of undervalued or growth sectors such as traditional energy.

This backlash is arguably best epitomised by the shift of the world’s largest asset manager, BlackRock, away from strict ESG mandates. 

Conversely, the EU parliament is proposing regulations aimed at ESG rating providers to increase their transparency and foster ratings that address “double materiality”. This emphasises the bidirectional impact of business activities and sustainability, influencing both company performance and environmental outcomes.

Relatedly, the International Sustainability Standards Board (ISSB) launched its first two standards aimed at harmonising sustainability standards.

Closer to home, SA is witnessing a heightened focus on ESG reporting.

The Prudential Authority has introduced its proposed guidance note on climate change disclosures and risk management tailored for banks and insurers.

In October last year, the national assembly approved the Climate Change Bill, a comprehensive piece of legislation to develop an effective climate change response.

There has also been an intense focus on SA’s just transition, evidenced by the publication of a just energy transition (JET) investment plan and implementation plan. 

The 2024 Sanlam ESG Barometer aims to delve deeper into these evolving trends, posing critical questions about the nature of “additionality” in the South African context. What does it mean to add to the stock of ESG good in the world, rather than merely avoiding harm? How are companies adopting ISSB standards and what progress is being made in aligning corporate strategies with the UN's sustainable development goals (SDGs)?

In addition to SA-listed companies, this year's report will also include Kenyan-listed enterprises; this expands the geographical scope of the research, providing a broader view of ESG practices and challenges in Africa.

The 2024 Sanlam ESG Barometer, presented in partnership with Business Day, is set to build on the foundation established by last year’s findings, aiming to set new benchmarks and inspire transformative strategies.

This research aims to reaffirm the importance of active, impact-driven ESG investing as a critical pathway towards a sustainable future. Through this lens, the report seeks to illuminate the innovative approaches and commitment of African companies to sustainability. 

Listed companies across SA and Kenya can contribute to this research by completing a survey on the Krutham website. By participating, you'll help shape a comprehensive understanding of local ESG practices and viewpoints, which will play a vital role in influencing how Africa is represented in conversations on global sustainability. 

For more information on how to participate in the 2024 Sanlam ESG Barometer, or for queries about the survey process, email cschultz@krutham.com.

Click here to complete the 2024 Sanlam ESG Barometer survey.

• About the author: Cecilia Schultz is Krutham’s senior researcher: social economy.

This article was sponsored by Sanlam.