Corporate responsibility, long seen as the preserve of companies in developed economies, is gaining ground in developing countries according to a review of ESG practices in 40 large emerging market companies – a new report published by Sustainable Investment Research Analyst Network (SIRAN), a working group of the Social Investment Forum (SIF).
SIRAN has partnered with global sustainable investment specialists EIRIS to assess 40 leading companies in ten emerging markets against key environmental, social and governance (ESG) criteria, including indicators on board practice, bribery, human rights, labor standards in the supply chain, health and safety, environment, climate change and biodiversity. Countries assessed in the study include Brazil, China, India, Indonesia, Israel, South Korea, Malaysia, Mexico, Russia and South Africa.
This report illustrates how the largest corporations in developing economic markets are addressing ESG issues and highlights the risks and opportunities these issues present to investors in emerging markets.
Key Findings Include:

* Progress – most companies show evidence of addressing at least some environmental, social and governance issues. This highlights opportunities for investors to encourage further progress by engaging with companies to seek better corporate disclosure.
* Best performers – The South African and Brazilian companies in the sample stood out overall as consistently having the highest assessments. One reason may be that their local stock exchanges have each launched a responsible investment index.
* Climate change – In analyzing companies by sector, disclosure related to climate change was strongest amongst companies in the resource sector, but even so, half of the 12 resource companies had no evidence of climate change disclosure.
* Human rights – Almost all (93%) of companies assessed on this issue received only a ‘limited’ grade for their human rights policies. No companies achieved a grade higher than ‘limited’ for their human rights systems or reporting.
* Health and safety – All but two of the 12 companies in the resource sector, where health and safety is a major concern, showed some evidence of policies in this area.
* Bribery – Most companies publicly disclosed some kind of anti-bribery policy. However, a majority of companies did not have a clear anti-bribery system nor showed evidence of reporting on their anti-bribery initiatives and only disclosed limited details of their management systems and performance.
* Board governance – More than 80 percent of the companies disclosed their remuneration to directors, and 70 percent separated the positions of board chair and CEO, but fewer than half had boards where one-third of the directors were independent.
Emerging markets are becoming the focus of international corporate responsibility initiatives. Emerging Markets Disclosure Project (EMDP), an international initiative spearheaded by SIF has surveyed the state of sustainability reporting in several emerging markets and has a sign-on statement for investors encouraging emerging market companies to improve sustainability reporting.

© 2009, Tracey de Morsella. All rights reserved. Do not republish.

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Author: Tracey de Morsella (323 Articles)

Tracey de Morsella started her career working as an editor for US Technology Magazine. She used that experience to launch Delaware Valley Network, a publication for professionals in the Greater Philadelphia area. Years later, she used the contacts and resources she acquired to work in executive search specializing in technical and diversity recruitment. She has conducted recruitment training seminars for Wachovia Bank, the Department of Interior and the US Postal Service. During this time, she also created a diversity portal called The Multicultural Advantage and published the Diversity Recruitment Advertising Toolkit, a directory of recruiting resources for human resources professionals. Her career and recruitment articles have appeared in numerous publications and web portals including Woman Engineer Magazine, Monster.com, About.com Job Search Channel, Workplace Diversity Magazine, Society for Human Resource Management web site, NSBE Engineering Magazine, HR.com, and Human Resource Consultants Association Newsletter. Her work with technology professionals drew her to pursuing training and work in web development, which led to a stint at Merrill Lynch as an Intranet Manager. In March, she decided to combine her technical and career management expertise with her passion for the environment, and with her husband, launched The Green Economy Post, a blog providing green career information and covering the impact of the environment, sustainable building, cleantech and renewable energy on the US economy. Her sustainability articles have appeared on Industrial Maintenance & Plant Operation, Chem.Info,FastCompany and CleanTechies.