SolAbility’s Global Sustainable Competitiveness Index (GSCI) shows that in general, high GDP countries are ranked higher in their ESG, though this is not always the case. Many higher GDP countries in the Middle East perform poorly.
Some low GDP countries (Eg: Peru, Laos), though poorer, rank higher in the
Index. When performance is viewed from a continental perspective, Scandinavians lead the entire GSCI pack while North America and Australia are also appearing to do well. Africa lags significantly behind (with only Ghana scoring higher).
What is the reason for the increased use of GSCI by investors, especially when they are focused on sovereign bonds? “Sovereign bond rating’s lack of ESG integration shows insufficient coverage of risks/opportunities in comparison to GSCI ratings” (csrwire.com-The Global Sustainable Competitiveness Index 2020)
Unlike the Global Sustainability Rankings, Climate Action Tracker (CAT) ranks countries based on their progress on the Paris Agreement Goals. CAT focuses on the reduction of greenhouse gas emissions and meeting the Paris Agreement Goals. It works on net zero (reducing greenhouse gas emissions as close to zero with a 45% reduction of emissions by 2030, and achieving actual net zero by 2050). CAT covers 32 countries with approximately 70% of global population, and creating 80% of global emissions. These 32 countries are considered to be the biggest emitters. The CAT Thermometer assesses progress of countries in comparison to the 1.5C Paris Agreement Goal. It evaluates four factors which include policies and action, 2030 targets, pledges and targets, and the optimistic scenario. Overall, CAT shows if a country is ‘on track’ to meet the Paris Agreement commitments. In the list of countries evaluated in CAT, Sri Lanka is still not included. CATs rankings are published in its Sustainability Yearbook.
MSCI ESG Indexes come from MSCI Inc, the world’s largest provider of ESG Indexes. MSCI directly evaluates listed companies’ emissions and ESG contributions in comparison to other companies.
According to MSCI, the Indexes have “over 1,500 equity and fixed income ESG Indexes designed to help institutional investors more effectively benchmark ESG investment performance and manage, measure and report on ESG mandates.” Among the 1500 indexes, MSCI ESG Leaders Indexes, MSCI Focus Indexes, MSCI SRI Indexes and MSCI ESG Universal Indexes are highly used indexes while there are many more sector specific indexes in MSCI’s bag that the investors can access. MCSI does not have a ranking of all countries but presents in-depth ESG info on companies in select countries such as India, China etc. For instance, its MSCI India Index (INR) ranks giant brands such as Reliance Industries, Infosys, Tata Consultancy, and Hindustan Unilever. MSCI has not forgotten Sri Lanka.
MSCI Sri Lanka Index highlights some interesting evaluations. According to the MSCI, it is designed to “measure the performance of the large and mid cap segments of the Sri Lankan market. With 3 constituents, the index covers approximately 85% of the Sri Lanka equity universe.” The 3 (listed) constituents are John Keells Holdings, Expolanka Holdings, and LOLC Holdings. MSCI says their combined market capitalization at US $ 312 Mn. John Keells Holdings has the highest MSCI index ranking within Sri Lanka at 60.18, followed by Expolanka Holdings (26.31), and LOLC Holdings (13.51).
