Are we discussing ESGs in Harare or Lusaka, or Lagos?

Are we paying enough attention to environmental issues in Africa? Image credit: WhyAfrica

By Leon Louw, founder and editor of WhyAfrica

15 May 2021 – Environmental, Social and Governance (ESG) issues are the talk of the town amongst a new generation of investors in Sydney, London, Toronto, and Wall Street. But does ESGs feature on the agendas when discussing the development of new projects in Harare, or Lusaka or Lagos?

As major financial institutions report massive inflows into the Environment Social and Governance (ESG) sector, and new projects are being developed throughout Africa, we have to start asking questions about the consistency of applying ESG standards in different countries and for different companies, especially in Africa.

While ESGs have become an investment megatrend amongst younger investors in Europe, the USA and the “developed” world, the question is whether African governments pay any homage to ESGs at all? Shouldn’t there be an ESG standards for governments as well? What about private Chinese, Russian, or Turkish companies operating in Africa? Who determines the ESG standards in this case and who monitors the extent of their social and environmental impacts?

From experience of working in Africa for many years, I can attest that environmental impacts and social development is not a priority for Chinese companies. It might be at diplomatic level and in Davos, or when the Chinese president addresses African delegations in Beijing. However, it is not the most pressing concern for the Chinese project manager or the CEO of companies under pressure from shareholders or the client to complete the project in time and on budget.

I am not picking on the Chinese though, there are many Canadian, British, and Australian executives, for example, who flaunt their great ESG credentials first during impressive company presentations at major international events, and in write-ups in fancy annual reports, and influential glossy magazines, but then forget all the regalia at home once they land in Africa.

It is great that companies have ESGs in mind, but the question is who monitors African governments that need to enforce these ESGs, and are these rules applied with the same vigour in Zimbabwe as they are in South Africa or Namibia, for example? Environmental and social concerns might be the talk of the town in London or Toronto or on Wall Street, but are they on the agendas in Harare, or Lusaka or Lagos?

Currently, there are numerous projects in Africa that should raise more than one flag. Oil, gas, and mineral exploration in, or adjacent to, extremely sensitive natural ecosystems of great tourism and heritage value, are being pursued in countries across the continent. I am not saying that these developments should not happen, all that I am asking, is whether the ESG standards and regulations that apply in Western countries, are given the same attention and thought when foreign companies operate in Africa, and whether African governments are enforcing the rules and regulations fairly and justly?

ESGs are of no value if one company walks the extra mile to mitigate social and environmental impacts, but right next to that company, the operator shows no interest in protecting the environment or empowering the local community because they have a local government official on the payroll. It is one thing to talk and to trade and to invest in ESGs, it is a different ballgame, however, trying to apply and enforce those ESGs on the ground.

Leon Louw is the founder and editor of WhyAfrica. He specialises in natural resources and African affairs. WhyAfrica provides you with business intelligence that matters. Africa is our business, and we want it to be yours too. To subscribe to WhyAfrica’s free newsletter or digital magazine, and for more news on Africa, visit the website at www.whyafrica.co.za or send a direct message.

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