Introduction: Environmental, Social, and Governance (ESG) principles have become central to global conversations on sustainability.
The Global ESG Imperative:
ESG frameworks have evolved from a niche concern to becoming a central tenet of global corporate strategy. From boardrooms to international policy meetings, ESG now guides brand identity, investment strategies, corporate governance, and industry practices.
This transition is driven by the recognition that long-term profitability is inextricably linked to sustainable and ethical practices. However, the adoption of ESG is profoundly uneven.
While Western corporations and markets have rapidly integrated these standards, Africa and other emerging markets in participation significantly lag and implementation. Why is this the case, and what can be done to bridge the gap?
This paper explores the historical context of ESG, the factors driving its global adoption, and the multifaceted reasons for Africa and other economies’ slower integration, concluding with a strategic roadmap for bridging this gap.
The Evolution of ESG and Corporate Sustainability
Until the early 1970s, industrial development proceeded with minimal regard for environmental or social consequences.
However, as public awareness of ecological damage and social inequality grew, businesses began shifting towards more responsible practices.
From CSR to ESG
The modern concept of Corporate Social Responsibility (CSR) was formally introduced in the 1950s by economist Howard Bowen, but gained real momentum in the 1990s as globalization highlighted corporate impact on society.
By the 2010s, over 90% of the world’s largest companies published CSR reports.
Early Corporate Leadership: One of the earliest pioneers of environmental responsibility was 3M, which launched the Pollution Prevention Pays (3P) initiative in 1975.
The program focused on eliminating pollution at the source through product reformulation, process redesign, and reuse systems—generating billions in savings while significantly reducing environmental impact.
Others, like IKEA, have also led with sustainable, eco-friendly products in their industry since the 1970s.
The Tablas Creek – a winery that adopted organic farming methods as early as the 1960s to create a healthier vineyard and protect its workers from chemical exposure and the earth from pollutants is another example.
Many notable leading companies (e.g., Ford Motors, Fisher Investments, Starbucks, Disney, Hewlett Packard, Nike, Johnson & Johnson, eBay, Google, to mention a few) over the years have introduced their own “Green” initiatives.
Others like Unilever set comprehensive sustainability priorities around climate action, nature protection, waste reduction, financial inclusion, and livelihoods improvement strategies into their value chain, demonstrating that ESG could drive innovation and reduce costs while strengthening brand value and securing/optimizing supply chains.
An example of this is Unilever’s Lipton billion-dollar+ global brand leading in implementing ethical sourcing way earlier, before regulation for tea farmers in Sri Lanka, India, China, and Kenya, under strict ESG guidelines—covering fair wages, labor practices, and environmental protections with products branded. Rain-Forest Alliance Certified(RA) and others, sustainable branding labels by others.
Hence, this movement has organically evolved in Western economies.
However, CSR’s limitations included often being perceived as unaccountable philanthropy or “greenwashing” and lacking standardization, as such being a superficial promotion of sustainability without meaningful action.
This prompted a demand for greater rigor at large. In response, the development of the ESG framework in the late 1990s into the early 2000s surfaced as a more robust, measurable approach, championed by global institutions:
The Rise of ESG Frameworks
The global institutionalization of ESG began in the late 1990s with initiatives such as:
- United Nations Global Compact (2000): Provided principles for sustainable business.
- Global Reporting Initiative (GRI): Created the first widely adopted sustainability reporting standards.
- Task Force on Climate-related Financial Disclosures (TCFD): Developed guidelines for climate-related financial risk reporting.
- International Sustainability Standards Board (ISSB): Established to create a global baseline of sustainability disclosure standards.
These frameworks elevated ESG from a “nice to have” to a critical performance and investment criterion for corporations. Unlike CSR, ESG offers a measurable, standardized set of criteria (e.g., carbon emissions, board diversity, labor practices) that investors and stakeholders can use to assess a company’s ethical impact and future financial risk.
Global ESG Integration: A Closer Look
Drivers of Global ESG Adoption – In developed economies, ESG has evolved from voluntary initiatives into mandatory standards.
The rapid uptake in developed markets was not accidental but driven by a powerful confluence of factors:
- Consumer and Civic Awareness: An educated and vocal citizenry uses purchasing power to support brands with strong sustainability credentials (e.g., Fair Trade, B Corp).
- Investor Demand: Asset managers like BlackRock and Vanguard now prioritize ESG performance, directing trillions of dollars in capital toward sustainable investments. ESG is now a critical component of risk assessment
- Regulatory Pressure: Governments in the EU and US have progressively embedded ESG disclosures into financial regulation (e.g., the EU’s SFDR, proposed SEC climate rules).
- Additionally, consumer-facing certifications like USDA Organic, Fair Trade, and B Corp now influence consumer choices and investment flows in developed economies.
ESG is no longer an add-on; it is a core strategic part of corporate governance, risk management, and brand equity.
Why are Africa and emerging markets lagging on ESG reforms?
A Multifaceted Challenge: In Africa, companies’ sense of rising obligation to communities has largely remained in the CSR mindset, unlike developed markets that have advanced into ESG practices.
This gap stems from limited public inquiry, weaker board oversight, low sustainability awareness, minimal scrutiny, and high costs of ESG standards, without consistent enforcement across the board.
Civil society pressure is lacking due to limited public education, while regulators lag in creating structured measurement and unbiased enforcement systems.
Policymakers also argue that emerging markets should first benefit from industrialization, with developed nations, historically the largest polluters, should bear greater responsibility for climate recovery.
The result is a fractured ESG landscape, where sustainability efforts remain ineffective. Global bodies push for standardized ESG regulation and incentives to drive progress on SDGs, but often overlook local barriers in emerging markets, hindering effective adaptation.
Despite the global momentum, most African and some emerging markets are not eager to fully embrace ESG. Nations with slower adoption stem from a unique set of structural, economic, and social impediments that differ from the developed world’s context. Aside from the above, other multifaceted reasons can be grouped under:
- Structural and Economic Constraints
Limited Market Incentives: Scrutiny from local investors, consumers, and civil society is less intense. Without this bottom-up pressure, the business case for ESG—often seen as a cost center rather than a value driver—is significantly weaker.
- Many emerging market businesses are still operating at early industrial stages, prioritizing survival and short-term gains over long-term sustainability.
- ESG adoption costs—additional data collection points, 3rd-party audits, compliance—are high, especially for SMEs in these areas.
- Unlike in the West, ESG doesn’t yet offer immediate financial returns in the emerging markets due to limited investor pressure and low consumer demand for sustainable practices.
- Capacity and Cost Constraints: Implementing ESG monitoring and reporting systems requires expertise and financial investment. For many small and medium-sized enterprises (SMEs) dominating the emerging markets, these costs are prohibitive without clear returns.
- Regulatory and Institutional Gaps: Unlike the EU or the US, most African and some emerging market nations lack robust, locally tailored ESG reporting mandates. Regulatory bodies are often under-resourced and prioritize immediate economic development over sustainability governance.
- Fractured Standards and “Greenwashing“: In the absence of strong local frameworks, a patchwork of global standards can be confusing and difficult to implement, sometimes leading to superficial compliance rather than genuine integration.
- ESG governance frameworks are underdeveloped or nonexistent in most emerging markets.
- Policy makers often lack the resources or capacity to monitor and enforce sustainability standards fairly across all channels.
- Institutional collaboration and coordination between governments, the private sector, and civil society is weak or fragmented.
- Societal Awareness and Cultural Context
- Public understanding of ESG is low; thus, there’s minimal grassroots or civic pressure on corporations to adopt ethical practices.
- In some cases, ESG is viewed as a Western-imposed standard that may constrain growth or development without researching the bottlenecks to implementation.
- The Global Double Standard
- The Industrialization Dilemma: Many African and some emerging economies’ governments and businesses argue they are still in the process of industrializing. They contend that stringent ESG standards act as a barrier to economic growth, a burden not faced by Western nations during their own industrial revolutions. The prevailing view is that the historical polluters should bear the greatest cost of mitigation (“common but differentiated responsibilities”).
Hence, Africa should be allowed to industrialize with minimal environmental oversight and should bear the brunt of global sustainability costs. This “polluter pays” argument fuels resistance to ESG mandates without corresponding incentives.
Bridging the ESG Gap in Other Emerging Markets: A Path Forward
Despite the hurdles, Africa cannot afford to remain on the sidelines. ESG offers not only access to global capital but a roadmap for resilient and inclusive growth. Key steps for catching up include:
- Regulatory Development and Incentivization
Develop Localized Regulatory Frameworks: Regulators (e.g., SEC – Nigeria, EPA & Energy Commission (EC) – Ghana, Financial Services Conduct Authority (FSCA) – South Africa) must collaborate with industry leaders to develop contextually relevant metrics and phased implementation timelines. Standards should align with the continent’s development stage and priorities, such as climate resilience and social inclusion.
- Governments should work with business leaders and international partners to:
- Establish context-specific ESG regulations
- Introduce graduated compliance timelines based on industry and development stage, with encouraged self-reporting tools within their eco sphere that make it easy for all stakeholders to learn and adapt to needs towards the common goals.
- Offer fiscal incentives (e.g., tax credits, subsidies, access to green funds)
- Monitoring and Award Recognition skims by funded by Global institutions
- Foster Public-Private Partnerships:
- Collaborate with global bodies like the UN and ISSB to ensure global alignment while adapting principles to local realities. Initiatives like the Africa and some emerging markets and some emerging markets where Green Infrastructure Investment Bank could be pivotal.
- Public Education and Capacity Building
- Build Capacity and Awareness: Launch targeted education programs for:
- Corporate Boards: On the long-term financial and risk-management benefits of ESG, as well as the corporate branding opportunities.
- Regulators: On effective monitoring and enforcement.
- The Public: To create a citizenry that demands corporate accountability.
- ESG literacy must be expanded across the public, private, and civic sectors.
- Incorporate ESG at all levels of society: from elementary through to university curricula, vocational training, and civil service programs.
- Partner with NGOs and media to spread awareness of the benefits of sustainability (anti-burning, deforestation practices, and other slogans amongst the less formally educated).
- Impact Measurement and Reporting Frameworks
Leverage Technology: Promote the use of AI and satellite data for affordable environmental monitoring and blockchain for transparent supply chain management, reducing the cost and complexity of reporting.
- Develop local ESG metrics tailored to the emerging markets realities, while aligning with global standards.
- Promote self-reporting tools and regional ESG scorecards.
- Ensure data transparency and third-party validation to build investor confidence.
- Leverage International Standards
- Adopt globally recognized certifications such as:
- Excellence in Design for Greater Efficiencies – EDGE: Green building certification system created by the International Finance Corporation (IFC) of the World Bank Group (also applies to Gender, Equity, and Workplace Diversity)
- ISO 14001 (environmental management)
- Global Reporting Initiative – GRI (Reporting framework)
- Collaborate with development institutions and donors to subsidize the costs of ESG audits and implementation.
- Create Economic Incentives Tailored to Energize the African and Emerging Markets:
Governments and development finance institutions (DFIs) must de-risk ESG adoption. This includes:
- Tax breaks for sustainable investments.
- Grants for green technology adoption.
- Preferential lending rates from banks for projects meeting ESG criteria.
Conclusion: Future-Proofing Africa and the emerging markets Business Through ESG
ESG is not a passing trend—it is a strategic necessity for long-term economic competitiveness, environmental resilience, and social equity. ESG is no longer an optional add-on but a fundamental component of long-term business viability, sustainability, and resilience.
For Africa and other emerging markets, lagging in ESG adoption poses a significant risk: exclusion from global supply chains, limited access to green capital, and vulnerability to climate change, etc.
However, this challenge also presents an opportunity. By leapfrogging outdated models and building ESG into its economic fabric, these markets can avoid the costly environmental and social mistakes of other regions.
By developing agile, locally-suited frameworks and fostering innovation, the continent can not only catch up but potentially emerge as a leader in sustainable and inclusive development, which prevails as a culture’s way of living” in harmony with nature, before the adoption of western practices.
The future of business is sustainable, and the emerging markets’ journey to integrate ESG is critical for its own prosperity and for the health of the global economy.
ESG adoption should not be a copy-paste of the Western models. Instead, it must reflect local priorities, developmental stages, and institutional realities, while aligning with the UN Sustainable Development Goals (SDGs), World Bank, and Global Institutions alike.
Call To Action
By taking proactive steps today, governments, businesses, and institutions must work together to:
- Governments must legislate, incentivize, educate, and integrate ESG into the national development strategy.
- Businesses must embed ESG in core strategy—not as charity, but as a driver of long-term value.
- Unlock capital from impact investors and sustainable funds to support the agenda.
- Civic society and academia must advocate for awareness and accountability.
- Global institutions must engage countries with equity, support, and partnership—not with one-size-fits-all mandates and corporate behavior with global expectations
ESG can become can part of Africa’s secure, sustainable, inclusive, and globally competitive future growth story. The future of sustainable development is collaborative, coordinated, and inclusive, covering all essential touch points to derive the same end goal.
“For lagging nations to thrive in the ESG era, they must be at the table, not on the menu”.
#Carbon Emissions, #Climate Disclosure, #CSRD Compliance, #Eco Active ESG, #Global Institutions #Manufacturing, #Research Organizations, #Boards/Investors/Investment Bankers, #General Readership
Source: Francis Sam