By
Nugroho W. Pratomo
Africa-Press – Mauritius. When BlackRock, the global investment giant, declared that sustainability is a “core pillar of long-term investing,” companies in developing countries had two choices: go with it or get left behind. The concept of Environmental, Social, and Governance (ESG) has become a hot topic in the world of business and investment. Companies worldwide are now required to adopt ESG, not as a matter of choice, but as a necessity for their business strategies. The pressure is mounting as global investors and trading partners increasingly demand ESG compliance as a prerequisite for investment and participation in global supply chains.
For developing countries that are still grappling with limited resources and economic constraints, ESG can often feel like a luxury that’s being forced upon them. This raises a crucial question: Is ESG disclosure just an extra cost, or is it a long-term investment in the global supply chain?
The Price of ESG: A Tough Initial Challenge
Implementing ESG doesn’t happen overnight. To meet ESG standards, companies often feel compelled to adopt green technologies and adjust their operations accordingly. On top of that, inconsistent reporting standards and a lack of reliable data make ESG reporting even more complex. While it may seem burdensome, ESG disclosure can actually offer long-term benefits.
For many companies in developing countries, ESG isn’t just an ethical commitment; it’s a significant expense that can make or break their business. Adopting eco-friendly technology and adjusting operations require investment, which is often seen as an added burden. Limited resources and access to financing mean these companies face a tough choice: allocate funds for ESG compliance with no immediate payoff, or focus on business activities that generate revenue today. The lack of awareness and understanding of ESG among small and medium enterprises only worsens the situation.
Despite these challenges, some developing countries are starting to turn things around. India, for example, has taken proactive steps by strengthening clean energy policies and offering incentives for green technology. This approach not only speeds up ESG compliance but also opens new doors for sustainable investment. It proves that with clear policy direction and the right regulatory support, ESG can be a way out of economic stagnation, not just an added burden.
Long-Term Benefits: ESG as a Strategic Investment
Behind the hefty price tag, ESG unlocks doors to strategic long-term benefits. Companies that consistently practice ESG earn greater market trust, making it easier to access funding, attract global investors, and build a positive reputation among consumers. This isn’t just wishful thinking. Bloomberg Intelligence projects that global ESG assets will reach $53 trillion by 2025, about a third of all global assets. In other words, ESG isn’t just an ethical strategy; it’s a main route to international capital flows. In a world that’s increasingly picky about business practices, ESG is a competitive tool that can’t be ignored.
As consumer and investor awareness of these issues grows, companies that are transparent in their ESG reporting tend to be more trusted and valued by foreign investors and global corporations, potentially attracting those looking to expand their portfolios. ESG can also catalyze sustainable economic growth in developing countries, helping them reduce dependence on environmentally harmful industries and transition toward a more sustainable economy.
ESG in Developing Countries: Opportunities and Challenges
Developing countries face real hurdles in implementing ESG, with the lack of consistent reporting standards being a major barrier. In Nigeria, for example, many companies struggle to collect and report ESG data due to resource constraints and unclear guidelines. This leads to a lack of transparency and hinders efforts to attract investment. The situation highlights the need for support from governments and international institutions to build the capacity and infrastructure necessary for effective ESG implementation.
On a brighter note, Malaysia offers a real-world example of ESG opportunity through the launch of its Simplified ESG Disclosure Guide by Capital Markets Malaysia. This guide is designed to help small and medium enterprises in the global supply chain prepare standardized and efficient ESG reports. Streamlining complex ESG frameworks enables SMEs to meet the disclosure requirements of various stakeholders, including customers, investors, and regulators.
To put it simply, ESG can be a driver of sustainable economic growth if there’s the will and regulatory support. But to get there, support from governments and international financial institutions is essential. Governments need to develop policies that back ESG implementation, while international financial bodies can provide the necessary support for companies in developing countries.
ESG: The Future Investment, Not Just a Cost Burden
Instead of seeing ESG as a burden, developing countries should make it a core survival strategy. While implementing ESG in developing economies is still full of challenges, the notion that ESG is just an “extra cost” needs to be left behind. In an increasingly competitive and sustainability-conscious global business landscape, ESG disclosure and practices must be viewed as a long-term strategy to attract foreign investors, improve efficiency, and expand market opportunities.
Companies committed to ESG not only enjoy a stronger reputation among investors and consumers but also gain broader access to green financing and policy incentives. In many cases, ESG disclosure has proven effective in attracting capital from investors who now consider ESG performance one of the main criteria in their investment decisions. In short, ESG isn’t just about “spending money” up front: it’s about ensuring business sustainability and resilience for the long haul.
Beyond that, ESG makes a significant contribution to sustainable development, both nationally and globally. For developing countries, adopting ESG can drive the transition to a green economy, reduce social inequality, and improve corporate governance. ESG isn’t just a cost burden; it’s an investment in the future that brings strategic, economic, social, and environmental value. In this era of disruption and climate crisis, ESG isn’t just a trend; it’s the ticket to the future of the global economy. And those who can’t adapt will inevitably be left behind.
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