Amid a global evolving environmental, social and corporate governance (ESG) landscape, the Sanlam ESG Barometer Conference, held on August 1, in Johannesburg, highlighted the current state of ESG across various sectors and how it is shaping business investment decisions.

With this in mind, the 2024 Sanlam ESG Barometer report, based on research conducted by Krutham, was launched at this year’s event. It includes insights about the ESG initiatives of  JSE-listed and, for the first time, Kenyan-listed companies.

During the conference, Sanlam group executive for market development and sustainability Karl Socikwa said the theme of the report ­– ‘investing in a future that we all need’ – underscored the necessity of the focus on strategic and critical projects, initiatives, solutions and investment in sustainable initiatives.

He noted that one of the key findings of the report indicated that more than 80% of respondents have an explicit ESG strategy, with an additional 16% in the process of developing one.

“What we've seen through the research is that entities are now taking meaningful strides in ensuring they have actual strategies, which are part and parcel of their corporate strategies, which speak to ESG, and this was something which was very encouraging to see among, specifically, this cohort of entities that have been researched in South Africa and in Kenya,” he said.

“This, for us, is a clear indication that the majority of these companies are now moving beyond . . . mere compliance, to looking at purposeful and impactful, or ESG, strategies, in their groups,” he added.

Another key finding of the report, according to Socikwa, indicates that nearly two-thirds of respondents identified purpose-driven impact as a top ESG objective. He said purpose and profit were “in no way inconsistent,” and were inextricably linked.

He also pointed out that the report indicates alignment between the ESG strategies of the respondents with the 17 UN sustainable development goals (SDGs).

Also speaking on SDGs, Krutham impact investing research head Nicole Martens noted that participating companies from Kenya and South Africa both reported using SDGs as a core framework for their ESG strategies.

During her presentation alongside Krutham executive chairperson Dr Stuart Theobald, Martens argued that African companies were navigating a complex, rapidly evolving ESG landscape.

She noted that, while there was growing momentum towards the policy and regulation that pushes companies to be more sustainable, she also pointed out that there was ESG pushback that could hinder the implementation of policies and regulations.

However, despite pushbacks, Martens said ESG remains “alive and well,” noting that there has been an increase in policies and regulations globally regarding ESG integration.

While the bulk of the surveyed Kenyan- and South African-listed companies do not expect the backlash to impact their ESG approach, Martens explained that companies did express concern on how the backlash could potentially impact the approach of their investors.

She added that, across both markets, it became evident that one of the most important reasons companies implement ESG strategies is to attract investors.

In this vein, Theobald explained that, when developing their ESG strategies, companies often turn to investors and shareholders in driving ESG strategies and related decisions.

Further, Socikwa explained that ESG additionality was also gaining traction among the surveyed corporates.

He explained that the report indicates that there is a strong commitment to projects that deliver developmental, governance and financial benefits.

“This approach not only enhances the ESG compliance but also yields substantial social and environmental benefits,” he said.

However, Socikwa noted that the journey towards ESG presents its own challenges, such as data availability, accuracy and consistency, which he said can be barriers to effective ESG implementation.

Despite challenges, he argued that the dedication of the surveyed companies to drive positive change is evident.

He posited that the Sanlam ESG Barometer aims to be a catalyst in turning these insights into lasting change, building resilience across key sectors, and fostering deeper decision making and knowledge sharing.

Hence, while the ESG landscape is complex, he argued that collective efforts can drive positive outcomes.

“By collaborating and sharing knowledge … we can ensure that our investments create a future that is sustainable, inclusive, and truly resilient, and this becomes so much more important, particularly on a continent such as ours, where ensuring the building of resilient communities faced with … social challenges is of vital importance,” he said.