MTN added to top sustainability index

MTN, whose share price has more than doubled in the past 12 months, has been added to a top sustainable investment index as its ratings on environmental, social and governance (ESG) performance have gone up recently.

The mobile operator’s focus on ESG is in response to a growing global trend, with some of the largest players getting in on the action.

While some argue that the trend is simply that — a fad, others believe ESG is quickly becoming mainstream.

MTN appears to be working to get ahead of the trend. 

Africa’s largest mobile network provider says its ESG performance had led to an upgrade in the group’s sustainability rating by index provider FTSE Russell, and its inclusion in the FTSE/JSE Responsible Investment top 30 index, which identifies SA companies with leading ESG practices.

MTN CEO Ralph Mupita said the rating upgrade “reflects the step change we have taken in our approach to sustainability and improving the risk profile of the group”.

FTSE upgraded MTN’s overall rating to 4.3 at the end of December, from 2.9 previously. The ratings are scored out of 5.0. In the telecoms sector, MTN moved from the 34th percentile in December 2019 — the last time such a ranking was performed — to the 97th percentile in December 2021.

ESG investing refers to a class of investing that is known as “sustainable investing”.

Katherine Davidson, portfolio manager for the Schroders ISF Sustainable Growth Fund, said it was unlikely that people would still be talking about ESG in 10 years. Schroders is a global asset manager with more than $800bn (R12.2-trillion) under management.

Davidson argued that sustainability had moved from being niche to being the norm, as environmental and ethical concerns “now influence how we shop, eat, travel and, inevitably, how we invest”.

She says values are fast becoming “as important as value”, maintaining that in a decade’s time it will be implicit in any kind of strategy.

Investment fund provider Satrix had been exploring ESG locally, as it created its first inclusion and diversity exchange-traded fund (ETF), which it said “empowers investors to invest in the JSE’s most inclusive and diverse companies”.

Compared to the mobile telecoms operators examined in the process, MTN is said to have scored favourably across categories such as human rights and community, labour standards, social supply chain, corporate governance and anticorruption.

MTN shares, which are up 149% over the past year, were 2.38% down at R161.63 in lunchtime trade on Monday. Sector peers Vodacom and Telkom were also trading in negative territory, down 0.99% and 1.56%, respectively. 

gavazam@businesslive.co.za