“CEE countries top new ESG impact ranking” – Global Markets – June 30, 2021

On June 30, 2021 GlobaMarkets reported:

“Investment analytics firm Impact Cubed has launched a new ranking for ESG impact based on which countries are improving fastest — an important factor when considering the view that those that demonstrate ESG leadership will attract more investment.

Central and east European countries are among the best in the world for environmental, social and governance performance, according to a new way of looking at the issue that aims to remedy some of the flaws in conventional ESG rankings.

Lithuania’s government bonds are the best globally to invest in for ESG impact, according to Impact Cubed, an investment analytics firm in London. In the top 10 are Czechia, Poland, Estonia, Hungary and Slovenia. Romania, Croatia and Slovakia are close behind.

On typical scorings from providers such as MSCI or Sustainalytics, only a couple of these would get in the top 20.

‘In a lot of methodologies the same very wealthy countries are ranked at the top and the low income ones at the bottom,’ said Arleta Majoch, partner at Impact Cubed. “It is always the usual suspects — of course Finland has the best gender equality.”

This is not just uninformative — it encourages investors to put money in the safest countries, not those which need help.

Mainstream ratings track countries’ levels of social and environmental development, to inform investors about possible ESG risks. Impact Cubed aims to measure ESG impact, by determining which countries are improving fastest.

From 247 indicators of progress towards the 17 Sustainable Development Goals, Impact Cubed has chosen 29 metrics with good data going back several years.

Traditional ESG raters use the same data. But Impact Cubed has worked out how fast countries typically improve. For example, it might take an average of 2.5 years for a country with life expectancy of 60 to raise this to 61. Impact Cubed rates each country on whether it is advancing on each metric faster or more slowly than normal at its level of development.”

You may read the article on the GlobalMarkets internet site.