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As a leading development finance institution, environmental, social and governance (ESG) issues rank very high on our corporate agenda, particularly in a time of resource constraints and rising social pressures, with public and private organizations facing an increased need for a strong approach to ESG integration in their operations.
The African Development Bank (AfDB) recognizes that achieving sustainable development outcomes on the continent requires greater assistance to its member countries in the diligent examination of proposed development actions to manage their potential adverse social and environmental risks and impacts. It is for this reason that the Bank developed its Integrated Safeguard System – a cornerstone of its Ten Year Strategy (2013 – 2022) to facilitate growth that is socially inclusive and environmentally sustainable. These Integrated Safeguards are designed to meet ESG international standards by promoting good corporate governance, mainstreaming environmental sustainability in all its operations and by improving social conditions on the continent.
As outlined in the AfDB’s Ten Year Strategy (2013 – 2022), the AfDB aims to position itself at the center of Africa’s transformation to improve the quality of life of African people and stimulate growth; growth that is not only environmentally sustainable but also economically empowering. As such, Corporate Social Responsibility (CSR) has been a strategic priority focusing on key principles such as corporate governance, community involvement and human resources management. As a result, the Bank was recently able to close the gap with peer institutions with a ten point increase from its previous ESG rating by international rating agencies.
The process: Three ESG rating agencies (Vigeo, Oekom, MSCI) periodically assess the Bank and assign a rating based on several social, environmental and governance criteria. As no common framework exists for ESG ratings, each agency has developed its own methodology. However, most agencies use the similar international standards to establish a rating criteria. Most of the ratings are not always made public, they are rather made available to the institutions that the ESG agencies assess.