It continues Scandinavian dominance of the biannual scoring of the environmental, social and governance (ESG) credentials of 65 countries. Sweden polled just ahead of its Nordic neighbors Norway, Denmark and Finland, with Switzerland breaking the hegemony in second place.
The best progress was seen by Portugal, which is restructuring its economy as it slowly emerges from recession, and Indonesia, which has made considerable improvements in human rights. However, Venezuela has gone “from bad to worse” amid a standoff between presidential claimants at the stricken South American country as the economy further collapses. At the bottom of the CSR rankings are Pakistan, Nigeria and India.
Environmental risk dominates global concerns in the battle against climate change, while democracy is under threat from growing authoritarianism and populism, says the reports’ author, Max Schieler.
“The Nordic countries and Switzerland maintained their leading positions, as they best preserved their democratic institutions and governance quality,” he says.
“With a considerable number of countries in advanced economies as well as emerging markets, suffering from growing political polarization, populist movements and even more authoritarian rule, good governance is under pressure.”
“This is problematic at a time when crucial challenges such as climate change, increasing inequality, and latent geopolitical tensions require a consistent, coordinated and decisive policy response.”
In other parts of the world, South Africa remains blighted by poor governance following years of corruption under former president Jacob Zuma. Urgent reforms are needed following the elections in May that have brought immense ESG challenges for new president Cyril Ramaphosa, the report says.
Turkey has seen “encouraging signals emerging despite an authoritarian grip” after municipal elections loosened president Recep Erdogan’s hold on power. Brazil and Qatar have lost some ground on environmental issues, while Argentina is holding steady for now.
This semi-annual report collects and analyzes ESG data from 22 developed and 43 emerging market economies via a structured and comprehensive framework to calculate an overall country score. It particularly aims to find things that are not reflected in sovereign debt ratings.
The resulting league table offers insights into the investment risks and opportunities associated with each country, and provide investors with a better frame of reference for making comparisons among countries and regions from a risk-return perspective.