Sustainable Development Shapes ESG Focus in Sub-Saharan Africa

Tue 20 Apr, 2021 - 10:37 AM ET

Environmental, social, and governance (ESG) issues are influencing investment in sub-Saharan Africa among foreign, regional and domestic financial institutions. Africa’s history of development-oriented finance is shaping how ESG is positioned on the continent, with a focus on how sustainability, economic growth, and human development can be achieved alongside each other. Fitch Ratings expects longer-term capital inflows into the region to be influenced by sustainability-oriented strategies addressing risks such as physical climate change, electricity infrastructure and transition from fossil fuel dependence. Sub-Saharan Africa faces growing physical climate change risks in the medium term, including rising temperatures and water stress. The trend of coastal urbanisation, particularly in west Africa, has placed millions of people and valuable infrastructure at risk of rising sea levels and coastal erosion. Estimates of the impact of climate change on the region point to physical risks having a sizeable impact on economic growth, making the need for investment into adaptation strategies increasingly urgent.

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