OVER the years, companies have been embracing Environmental Social and Governance (ESG) policies as global institutional markets started demanding for such practices as a precondition for credit and investment. The level of credit and investment a company would receive would then be determined by how a company scored on the ESG metrics.
ESG’s environmental criteria gauges how a company safeguards the environment while doing its business with the social aspect examining how it manages relationships with employees, suppliers, customers, and communities. In terms of governance, this measures a company’s leadership, executive pay, audits, internal controls, and shareholder rights, basically looking at whether a firm is conducting itself honestly.
The discussion around ESG featured in Nyanga, at the two inaugural Capital Markets Conference where players sought to find ways of navigating around the impact of ESG investing and sustainable finance.
One popular way in accessing ESG financing and investment are carbon credits.
Last year, Zimbabwe announced that it would allow developers of carbon credits to keep as much as 70% of the proceeds for the first decade of a project, with 30% paid as an environmental levy.
Thus, market players are seeing vast opportunities in this regard. Speaking during a panel discussion, Imara Edwards Securities (Private) Limited managing director Sebastian Sibanda said an investment in ESG was a legacy that was left for future generations.
“But, more than that, we are endowed with all these natural resources, and we need to find a way of rapidly jumping on the bandwagon and getting some of that investment to come to our shores. If you look at other elements of ESG investing, for example, we are aware of all the scandals, we are aware of all the weaknesses and the governance and some of the scandals that have taken place in the past,” he said.
“But, beyond that, it is important to note that it’s more than just an investment looking for a financial return. An investment in ESG is a legacy that is left for future generations of human beings. So, beyond the simple financial considerations that we all focus our energies on today, I think it is important to keep that in mind.”
Sibanda said looking at opportunities in ESG investment market in Zimbabwe, it was important to know that the global market was still in development. Thus, he continued, it was crucial to consider that the investments made now were investments formalising what the country already has.
“I don’t think that can be quantified in dollar terms when talking of the benefit that will accrue to us in the future,” Sibanda added.
“And, I’d also like to think about, from the more practical standpoint, the data points that we will create by introducing ESG metrics and a formal framework now, are data points that we can use to further enhance our regulation to shape the policy going forward, and in the short term, perhaps attract some of that money that is available.”
Institutional lenders and financiers are currently pouring billions in United States dollars towards supporting ESG projects.
Nedbank Zimbabwe managing director Sibongile Moyo said there was a need to ensure a sustainable future for everyone when investing.
