It has revealed that:
- Scandinavian countries continue to rank high on the index, with Sweden in first place, followed by Switzerland, Finland, Norway and Denmark. Japan and South Korea are the only Asian countries in the top 20, while many of the laggards are war-torn countries that have suffered serious human rights abuses. Rich Middle Eastern countries that do little to improve their ESG scores also rank bottom, while many poorer countries in Africa and Eastern Europe are making significant progress.
- In a ranking that takes development bias into account, Sweden, Switzerland and Finland continue to perform the best. They are joined in the top 20 by four African countries: Liberia, Malawi, Niger and the Democratic Republic of the Congo.
- The United Kingdom has ranked 10th, the same position he held 10 years ago. Positive indicators show a reduction in the use of coal and in the intensity of CO2, while occupying a prominent place in the protection of species. However, like many developed countries, its political and governance indicators have worsened in the last decade, with sharp declines in the transparency of laws and the equality of social groups.
- The United States has been placed outside the top 20 countries, ranking 25th (down four spots since 2012). It has dropped in all political and governance scores over the course of the Trump administration, including less freedom of speech and transparency of the law. The ESG index also highlights the level of income inequality in the country, which has skyrocketed. It ranks 81st out of 135 countries, ranking below Russia and China. The country also remains highly dependent on fossil fuels, as only 20% of its energy comes from renewables.
- The intensity of carbon emissions is the indicator that has improved the most in many of the best performing economies. However, many of these countries continue to produce very high levels of carbon dioxide, which is reflected in the weak performance of countries such as the United States and Germany.
- The macro ESG story of China has many shades. It scores well on social indicators such as gender equality, life expectancy, and infant mortality, but scores poorly on most governance and political indicators and CO2 emissions. The intensity of their emissions has improved in the last decade and the authorities’ plans to decarbonize the economy are more ambitious than those of a typical emerging economy. Encouragingly, there have also been tangible improvements in the absence of corruption in China over the past 10 years, reflecting the success of Xi Jinping’s anti-corruption campaign. However, these improvements contrast with the results of China in the indicators of freedom of expression and equality of social groups, which show a marked deterioration in the last decade.
The ARI ESG index collects data from the last decade to highlight the ESG problems and challenges facing each country. It indicates the advances and how these can be improved in the most appropriate way for each nation. Its 19 indicators, which are aligned with the EU Sustainable Development Goals (SDGs), are identified as follows:
- Environment: intensity of CO2 emissions, air quality, protection of species and drinking water.
- Social: Life expectancy at birth; mortality rate for children under 5 years old; mean years of schooling; expected years of schooling; gender inequality index; index of the well-being scale; relationship between employment and population; and income inequality.
- Governance (and politics): civil society commitment; inequality of social groups; freedom of expression; absence of corruption; clean elections; transparent laws with predictable application; and, access to justice.
Stephanie Kelly, ARI Deputy Directorsaid: “The goal of the ESG Index is to better support our investment teams with their ESG analysis.” “It is especially interesting to see that many of the developed countries are in a low position in terms of political and governmental factors during the last decade, especially in the United States, where the Trump administration has had a great impact. However, the improvement in the intensity of carbon emissions for many of the best-performing economies is undoubtedly good news, perhaps reflecting that the political efforts being made in these countries to reduce emissions are having an impact. a clear effect ”.
“We want it to be better understood that ESG factors are critical to a country’s growth and development, and the very specific measures we have used make it easier for investors to see what can be improved and where. Keeping track of improvements or setbacks in subsequent years essentially helps paint a realistic picture for investors. “