Evaluating ESG risks and opportunities is a crucial aspect of ESG investing. Investors can use a variety of approaches, including ESG ratings and scores, ESG due diligence, engagement with companies, and ESG integration, to evaluate a company's ESG performance and incorporate it into their investment decisions. The increasing importance of the social component of ESG presents new challenges, in quantifying issues such as human rights, labour protection, inclusion and community development objectives, to ensure successful outcomes for investors, businesses, and African communities. Ultimately, the most effective approach will depend on an investor's specific investment objectives and the resources available to them.
In the African context, ESG can unlock a new wave of sustainable investments, if implemented correctly. As an example, the recent focus on climate change and sustainability, particularly evident in events like the UN's Africa Climate Week, underscores three key themes impacting the continent:
Firstly, there's a consensus on the necessity for Africa to transition to cleaner energy sources.
Secondly, there's growing optimism about the opportunities climate action presents for Africa, given its vast mineral wealth.
Thirdly, there's a strong belief that climate change responses must be contextualised, with issues such as community engagement and responsible supply chain management requiring a unique, Africa-led approach.
However, key questions remain for investors and Development Finance institutions (DFIs) looking to deploy sustainable capital into the continent:
How should investors positively integrate ESG considerations?
How should investors and other stakeholders work together to drive a sustainable investment pipeline?
And what are some of the current risks investors should be on the lookout for?
To answer this questions, Invest Africa joined hands with S-RM to host a strategic breakfast roundtable on the sidelines of the AfDB Annual Meetings, taking place in May in Nairobi, Kenya. The invitation-only roundtable will be a unique opportunity for investors to get together and share relevant experiences to unlock greater capital allocation to sustainable opportunities across Africa.
In partnership with
