Sweden has again topped the charts in RobecoSAM’s biannual survey of a nation’s sustainability credentials.
The country leads the autumn edition of the Country Sustainability Ranking (CSR), followed by its Scandinavian neighbor Denmark and then Switzerland, with no change in the composition of the top 10 nations.
Bottom of the rankings are Pakistan, Nigeria, Venezuela and Ukraine. Of the emerging market giants, China is fifth from bottom due to various deficiencies in its environmental, social and governance (ESG) profile, while India is 10th from bottom, though still ranking above Turkey.
“This year’s Autumn Update of the Country Sustainability Ranking renders no surprises,” says Max Schieler, Senior Country Analyst at RobecoSAM. “The Scandinavian countries and Switzerland have consolidated their leading positions, while the emerging giants India and China remain among the weakest ESG performers. They are also ranked at the bottom of our investment universe.”
Brazil has fallen in the rankings following the election of populist President Jair Bolsonaro on a right-wing agenda, while the murder of US-based journalist Jamal Khashoggi has come as a grim reminder of Saudi Arabia’s democracy deficit and poor human rights record.
“Populism is still very much alive, as recent election results have shown, and will likely impact various countries’ ESG profiles going forward,” Schieler says. “Whereas public reaction to events involving Saudi Arabia has been one of shock and disbelief, the kingdom’s democratic deficits have been consistently reflected in our governance indicators and analysis in recent years.”
The biggest faller was the usually safe haven of Luxembourg, which is facing an unsustainable pensions and social security bill for its aging population. Germany’s political instability after long-time Chancellor Angela Merkel announced she would quit also cost it ranking points. As Luxembourg’s 0.2 drop was higher than Germany’s 0.11, the two nations swapped places to 12th and 13th, respectively. Norway also fell, dropping to 0.09 points to finish fifth.
“In all three cases, the setback is entirely due to a poorer performance in some governance areas and political risk (in Germany), as well as higher net present value estimates for pension and healthcare spending, which is undermining the sustainability of the respective social security systems,” Schieler says.
The UK and US were able to maintain their ESG scores, despite contentious issues relating to Brexit and an erratic President Trump. “Both show a deterioration in social unrest, political risk and political stability indicators, reflecting greater uncertainty, more pronounced risks, increased polarization and a widening social divide,” Schieler says.
More generally, the standards of governance have dropped around the world. “A pronounced deterioration in aging scores (South Korea and Poland) characterizes losing countries, while increased corruption (Malaysia and Russia), the weakened rule of law (Malaysia and Poland) and declines in regulatory quality (Turkey) contributed to deterioration in worldwide governance indicators,” Schieler says.
RobecoSAM uses a range of ESG metrics to establish how sustainable a country is on a long-term basis. It collects data from 65 countries – 22 developed and 43 emerging – twice a year. The resulting scores offer insights into the investment risks and opportunities associated with each country, and provide investors with a better frame of reference for making comparisons between countries and regions from a risk-return perspective.
The Robeco Capital Growth Funds have not been registered under the United States Investment Company Act of 1940, as amended, nor or the United States Securities Act of 1933, as amended. None of the shares may be offered or sold, directly or indirectly in the United States or to any U.S. Person (within the meaning of Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”)). Furthermore, Robeco Institutional Asset Management B.V. (Robeco) does not provide investment advisory services, or hold itself out as providing investment advisory services, in the United States or to any U.S. Person (within the meaning of Regulation S promulgated under the Securities Act).
This website is intended for use only by non-U.S. Persons outside of the United States (within the meaning of Regulation S promulgated under the Securities Act who are professional investors, or professional fiduciaries representing such non-U.S. Person investors. By clicking “I Agree” on our website disclaimer and accessing the information on this website, including any subdomain thereof, you are certifying and agreeing to the following: (i) you have read, understood and agree to this disclaimer, (ii) you have informed yourself of any applicable legal restrictions and represent that by accessing the information contained on this website, you are not in violation of, and will not be causing Robeco or any of its affiliated entities or issuers to violate, any applicable laws and, as a result, you are legally authorized to access such information on behalf of yourself and any underlying investment advisory client, (iii) you understand and acknowledge that certain information presented herein relates to securities that have not been registered under the Securities Act, and may be offered or sold only outside the United States and only to, or for the account or benefit of, non-U.S. Persons (within the meaning of Regulation S under the Securities Act), (iv) you are, or are a discretionary investment adviser representing, a non-U.S. Person (within the meaning of Regulation S under the Securities Act) located outside of the United States and (v) you are, or are a discretionary investment adviser representing, a professional non-retail investor. Access to this website has been limited so that it shall not constitute directed selling efforts (as defined in Regulation S under the Securities Act) in the United States and so that it shall not be deemed to constitute Robeco holding itself out generally to the public in the U.S. as an investment adviser. Nothing contained herein constitutes an offer to sell securities or solicitation of an offer to purchase any securities in any jurisdiction. We reserve the right to deny access to any visitor, including, but not limited to, those visitors with IP addresses residing in the United States.
This website has been carefully prepared by Robeco. The information contained in this publication is based upon sources of information believed to be reliable. Robeco is not answerable for the accuracy or completeness of the facts, opinions, expectations and results referred to therein. Whilst every care has been taken in the preparation of this website, we do not accept any responsibility for damage of any kind resulting from incorrect or incomplete information. This website is subject to change without notice. The value of the investments may fluctuate. Past performance is no guarantee of future results. If the currency in which the past performance is displayed differs from the currency of the country in which you reside, then you should be aware that due to exchange rate fluctuations the performance shown may increase or decrease if converted into your local currency. For investment professional use only. Not for use by the general public.