People often assume that emerging markets are lagging behind developed markets when it comes to corporate sustainability. Yet data collected through the RobecoSAM Corporate Sustainability Assessment over the years reveals that emerging market companies have caught up with their developed market peers, and in some cases surpassed them. Kathelijne Marritt Alers and Guido Giese outline areas in which emerging markets-based companies are exceling, and explore some of the drivers behind their strong sustainability performance. Guido Giese Head of Indices Kathelijne Marritt Alers Senior Relationship Manager, Sustainability Indices
Skepticism towards the combination of sustainability and the emerging markets1 is widespread, as people tend to assume that these developing economies may not be particularly conducive to producing sustainability leaders or are improbable environments for best corporate sustainability practices. However, RobecoSAM has found that some of the world’s leaders in the field of corporate sustainability come from the emerging
Since 2009, RobecoSAM has seen a steady increase in the number of emerging market companies listed and being awarded medals in the Sustainability Yearbook.
1 In the context of this article, RobecoSAM considers the following 20 countries to be emerging markets: Brazil, Chile, China, Colombia, the Czech Republic, Egypt, Hungary, India, Indonesia, Malaysia, Mexico, Morocco, Peru, the Philippines, Poland, Russia, South Africa, Taiwan, Thailand and Turkey.
2 The Yearbook medal classifications were introduced in 2009.
markets. Moreover, this can be determined without diluting the methodology of its global Corporate Sustainability Assessment (CSA) and by asking emerging market companies exactly the same questions as their developed market peers. Since 2009, RobecoSAM has seen a steady increase in the number of emerging market companies listed and being awarded medals in the Sustainability Yearbook.2 Figure 1 shows that in the last six years, the number of emerging market companies included in the Yearbook has more than doubled, growing from 19 in 2009 to 48 in 2014, with the majority of these coming from Brazil and South Africa. In 2014, 21 emerging market companies have been awarded one of the 222 Yearbook medals, up from 13 in 2009. It is also worth noting that in terms of total number of Yearbook medals, Colombia and Taiwan are leading the way, ahead of Brazil and South Africa.
20 • RobecoSAM • The Sustainability Yearbook 2014
Emerging market companies catch up Although these markets have historically produced some of the leading companies in terms of corporate sustainability and an increasing number of companies from these regions have been invited to take part in the CSA each year, the absolute number of participating emerging market companies has remained low. Still, in 2013 RobecoSAM observed a 31% increase in the number of emerging market companies participating in the CSA. From 2008 to 2013, the number of companies participating in the CSA from these markets grew from 27 to 89, representing an improvement in the participation rate from 4.6% to 10.9%, confirming the trend towards long-term thinking and improved sustainable practices that are becoming ever more present in this part of the world. In addition to increased awareness and participation in the annual assessment, the improvements emerging market companies have seen in their sustainability strategies from year to year are also laudable. For instance, in 2014, 7 out of 70 Yearbook gold medals have been awarded to companies from the emerging markets, representing 10% of all medals in this category. RobecoSAM sustainability data also shows that across a range of criteria, companies in the emerging markets are becoming more comparable to their developed market peers. A simple illustration of this can be found in Figure 2, which compares the sustainability performance of emerging market companies included in the 2014 Yearbook against that of the developed market Yearbook companies.