NEDBANK Zimbabwe managing director Sibongile Moyo has urged shareholders and investors to encourage the firms they are in to adopt environment, social and governance (ESG) guidelines to ensure future sustainability.
The push for firms to adopt ESG practices has seen foreign institutional investors and international lenders putting it as a prerequisite for firms seeking capital.
According to American financial and economic literacy website, Investopedia, ESG investing refers to how companies score on these responsibility metrics and standards for potential investments.
In terms of the environmental criteria gauge, this refers to how a company safeguards the environment while the social criteria examine how it manages relationships with employees, suppliers, customers, and communities. Regarding governance, this measures a company’s leadership, executive pay, audits, internal controls, and shareholder rights.
At the two-day inaugural Capital Markets Conference jointly organised by the Zimbabwe Independent in Nyanga last week, urged shareholders and investors to encourage the board of the company in which they serve to adopt ESG practices.
“Our investors who are bringing in capital want to create value dividends, obviously, but more importantly, they need to preserve value to ensure future sustainability of their businesses. Quick solution, ESG practices is what will do that,” Moyo told the delegates.
“Their role though in doing this, as shareholders, can only be done through agents like yourselves, boards of directors, investment advisors, through the voting rights which many of you hold on, behalf of your clients, nominees.”
Moyo said shareholders needed to know what the business was doing in pushing for ecological practices in their operations.
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“So, in terms of what is being done out there, its best practice, if we look at the JSC (Judicial Service Commission), they recently issued disclosure guidelines on sustainability in 2022. But these are just guidelines. They are not prescriptive,” she said.
“All they’re saying is these are good to do things and if you feel like you want to do this for the greater good of the society and if your foreign investors or some of your investors want you to do this here’s a guideline and this is how you will show them that you put these practices in place.”
The Nedbank boss said this relied on moral suasion or on the weight that investors had depending on the dollars they brought into the firm and where they wanted to spend it.
There is no legislation that forces companies to adopt ESG practices in their activities, but there has been a significant increase in companies adopting such initiatives over the years.
“The advisors here present, please provide guidance to project developers and investors.
“What projects are there that mitigate the climate change? There are lots of projects out there. Then advisors assist organisations in navigating the complexes of decarbonisation,” said Kreston Zimbabwe Trustee Service director Christinah Machingambi.
One area in which companies are pushing to adopt ESG practices, is in the carbon credit market that has grown into an industry with billions of United States dollars’ worth investment funds.
“To regulators, we want you to provide a framework for us to trade in carbon markets.
“There is no way that carbon markets can be traded without a framework, without trading rules,” Machingambi said.
“So that’s what we need as soon as possible so that everyone here present will be able to participate in that space.
“I also need you, after everything has been done, the regulator to register the carbon-related funds.”
The conference was held under a partnership between the Zimbabwe Independent, Zimbabwe Stock Exchange, and Securities and Exchange Commission of Zimbabwe.
