Written by Coenraad Bezuidenhout
Sustainable investment in emerging markets has gained significant traction in recent years, driven by the growing awareness of environmental, social, and governance (ESG) factors. However, measuring and reporting the impact of these investments in such markets pose unique challenges. This was the topic of discussion between Saldanah Freeport CEO Kaashifah Beukes, Norsad ESG Manager Kay Malela and Head of Investments for Southern Africa at Untapped Global, Grace Legodi at the recent Europe-Africa Summit. They identified three priorities for impact investors to really lean into to ensure progress on the impact measuring and reporting front.
Priority 1: Comprehensive data tracking and transparency bring impact successes and challenges to life.
One of the primary challenges in sustainable investment reporting in emerging markets is maintaining a comprehensive database to track the long-term impact of various initiatives. Without the right tools, continually updating and monitoring data related to skills development, enterprise support, and supply chain development programs can be an overwhelming task. Yet this data is essential for investors to assess the effectiveness of impact investment programmes and to make informed decisions about further development initiatives.
“It is essential to share both the positive impact stories and challenges faced during these initiatives”, said Beukes. “Transparency in reporting is key to building trust with stakeholders and communicating the positive difference sustainable investments are making in local economies. These stories not only humanize the data but also showcase the commitment of investors to driving positive change”.
Additionally, Kay Malela stressed the importance of data collection, integrity, and public disclosure:
“Impact investors, especially those operating across diverse sectors and countries, should prioritize comprehensive data tracking to measure and report impact effectively. This includes collecting data on key indicators like job creation, gender equality, and youth employment. Public disclosure of impact data helps build trust and accountability with shareholders and the public”.
Priority 2: Align with international reporting frameworks for a common language in which to convey progress and setbacks.
The discussion highlighted the value of aligning sustainable investments with international frameworks. Malela emphasized that impact investors should choose investments that align with the SDGs and address specific societal needs. This alignment not only helps define the impact more clearly but also resonates with global sustainability objectives.
International frameworks like the SDGs provide a fundamental reference point for impact reporting, but further framework considerations would also depend on who the funders are – IFC performance standards, for instance, far exceed what is required by national requirements or SDGs, comprising market mapping, corporate impact, and portfolio impact analysis.
These tools offer a common language and set of goals that can guide sustainable investment initiatives. By aligning with these frameworks, investors can demonstrate their commitment to global sustainability and contribute to broader societal goals.
Priority 3: Embrace technology and AI for data Integration and efficient reporting.
The adoption of technology and data integration is crucial for streamlining sustainable investment reporting in emerging markets. In a resource-constrained environment, both government entities and businesses often struggle to allocate resources for data analytics and technology adoption. On this issue Grace Legodi was unequivocal: “Digitalization and the use of artificial intelligence (AI) can simplify data collection, analysis, and reporting”.
Digitalization and AI not only make data collection more efficient but also make the data more digestible for various stakeholders. These technologies can automate manual processes, reduce the risk of errors, and provide real-time insights. Data should not only be viewed as a tool for risk mitigation but also to identify opportunities for positive impact, which can drive sustainable growth.