IPEC schemes ESG framework

14

THE Insurance and Pensions Commission (IPEC) says it is set to come up with an Environmental, Social and Governance (ESG) guideline for the industry.
This comes as the country’s financial services sector has started integrating sustainability and climate change principles, while regulators around the world are shifting ESG principles from a moral responsibility to a mandatory legal requirement.
ESG covers the major aspects of socially-responsible investments, and it is a framework for assessing the impact of the sustainability and ethical practices of an organisation.

IPEC board chairman Albert Nduna said the commission was in the process of framing ESG guidelines that were specific to the insurance and pension industry.
“This will be rooted in prescribed assets whose goal is to balance return on capital and developmental role,” he said in the regulator’s 2021 annual report.

Zimbabwe Insurance and Pensions Apex Council (ZIPAC) chairman David Nyabadza said the industry had already made significant strides.
“A lot of our players, particularly those listed on the Zimbabwe Stock Exchange, are doing a lot in the sustainability space,” he told The Financial Gazette this week.

“The industry’s ESG is, however, still fragmented and we would like to see it come together.
“But, in the meantime, we have a strategy at the continental level, the Nairobi Declaration. We have been trying to encourage our members to sign onto that because it is rigid and it is also supported by the United Nations and has clear strategies,” Nyabadza said.

Meanwhile, the Zimbabwe Stock Exchange (ZSE) said it will soon make it mandatory for listed companies to report on sustainability and climate change issues as businesses around the world come under increasing pressure to shift to a more socially-conscious form of stakeholder capitalism.
The local bourse’s chief executive, Justin Bgoni, told The Financial Gazette that the ZSE will soon implement a number of measures to ensure that companies adopt a new reporting framework on their ESG impacts.

ESG reporting is aimed at helping companies operate responsibly and help in addressing global challenges, such as global warming and human trafficking.
“The ZSE revised its listing rules in 2019 to encompass requirements for sustainability information and disclosure. The plan is to implement ESG disclosure requirements through training first and review of financial reports published by listed companies. We will be issuing a guideline shortly that will give a timeline on when ESG reporting will become compulsory,” he said.

Ultimately, organisations are required to create a report that will allow stakeholders to understand the company’s operations.
From the report, stakeholders will be able to decide whether to buy its products, invest in the company, or join its community.

Bgoni said listed companies that fail to fulfil ESG reporting requirements may see their bottom line suffering due to lack of investors and customers.
“Given this growing global demand for companies to move towards sustainable practices, socially responsible investment leaves little choice for our companies other than to adopt ESG principles. Those that fall behind will likely tarnish their brand and reputation, lose competitive advantage and ultimately see a decrease in their bottom line,” he said.

The Johannesburg Stock Exchange has already published ESG guidelines for companies in South Africa.
Last year, telecommunications giant Econet Wireless Zimbabwe took a major step in demonstrating its commitment to sustainable development by joining the United Nations Global Compact (UNGC), the world’s largest corporate sustainability initiative.

The UNGC brings together businesses from across the globe to implement principles of sustainable development and corporate responsibility.
It has more than 13 000 companies in over 160 countries.

The initiative encourages organisations to align their strategies and operations with universally accepted principles of environment, social, governance and human rights, as well as the sustainable development goals.

Econet Zimbabwe chief executive Douglas Mboweni said becoming a member of the UNCG was part of the mobile telecommunications organisation’s commitment to sustainability.
“As a UNGC participant, we will be able to leverage the initiative’s vast global network of participants to embed sustainability into our core strategies and operations.

“We very much look forward to working with member organisations to advance sustainability through this initiative, drawing inspiration from others, and hoping that some organisations will learn from our own experiences,” he said.
newsdesk@fingaz.co.zw