Sanlam ESG Barometer goes behind the scenes of sustainability strategies

Companies in Southern Africa, as elsewhere in the world, are facing growing pressure to transition to more sustainable and inclusive business models.

Now in its second year, the 2024 edition of the Sanlam ESG Barometer, in partnership with Business Day, provides a window into how companies in SA and Kenya are thinking about environmental, social and governance (ESG) integration by not only reviewing what companies are doing to enhance sustainability, but also why they choose certain actions.

Cecilia Schultz, senior analyst at Krutham’s (formerly Intellidex) capital markets practice and ESG Barometer project manager, says the most significant change to the report compared to 2023's inaugural edition is the inclusion of Kenyan listed companies in the survey.

“While we are still some distance from our ambition of producing a comprehensive African account of ESG adoption and experiences, this marks an important step towards a more regional perspective,” says Schultz.

“Expanding the geographical scope also allows us to capture a more nuanced understanding of ESG practices and challenges within both Kenya and SA, offering comparative insights that highlight commonalities and regional differences.”

This edition, she says, also delves deeper into how companies are aligning their ESG strategies with the UN Sustainable Development Goals (SDGs) as the 2030 deadline nears.

“We are particularly focused on assessing the depth of company engagement with the SDGs, examining the specificity with which companies target sub-goals and indicators, and how these efforts are reported,” Schultz says.

Additionally, the 2024 Sanlam ESG Barometer, due to be launched in the first week of August at the Sanlam ESG Barometer Conference, examines in greater detail how global ESG trends are influencing local adoption and shaping corporate and investor attitudes towards sustainability.

One of the main themes emerging from the 2024 survey is the rising significance of ESG considerations among regulators and civil societies across the continent, says Schultz.

This was not only evident in this year’s research, but also can be seen in a surge of ESG-related litigation in Africa in recent years.

Legal actions, such as the case against Shell in Nigeria involving a recent oil spill, show increasing engagement from local communities and NGOs in holding companies and governments accountable for environmental and social issues.

“There is a growing demand for those in power to ensure a more sustainable, climate-resilient future,” Schultz says.

Another emerging theme is the growing recognition that ESG is crucial for operational stability. “While many companies still adopt ESG strategies primarily to attract capital, financial benefits are no longer the sole reason. Most companies have active ESG engagement strategies with entities in their value chain to ensure the sustainability of their operations,” she says.

More than 800 people have already registered to attend the Sanlam ESG Barometer Conference virtually on August 1 in Johannesburg.

The conference will delve into some of the key findings from the survey, including the similarities and differences between South African and Kenyan companies’ approach to ESG, the role of investors in the design of ESG strategies, and the key considerations to assess when examining ESG integration in hard-to-abate sectors.

The Sanlam ESG Barometer presents more than just a retrospective look at what has happened. Rather, it presents a detailed picture of how companies are thinking about ESG, says Schultz. “Understanding the motivations behind ESG integration provides us with a unique perspective in the form of a rare behind-the-scenes look at not just what these companies are working on today, but also how they are thinking about and planning for tomorrow.”

These findings are useful for listed companies in terms of assessing how their approaches align with regional market trends and how they compare to their peers.

For further information on the Sanlam ESG Barometer Conference or to register click here.

This article was sponsored by Sanlam.