We created our Global ESG Index in 2018 to help monitor progress made towards the Sustainable Development Goals (SDGs) set out by the United Nations three years earlier.

The index scores and ranks 135 countries against 19 environmental, social and governance (ESG) indicators to assist investment analysis and decision making.

We have updated the results every year to reflect developments that shape our fast-changing world. Here are the key findings from the latest update:

Scandinavian countries continue to dominate the rankings. Sweden ranks first followed by Switzerland, Finland, Norway and Denmark. Japan and South Korea are the only Asian countries to feature in the overall top 20 (See Chart 1).

Macro ESG indices tend to have a development bias due to the high correlation between living standards and sustainability outcomes. When adjusted for countries’ level of economic development, a number of African countries, such as Liberia and Malawi, manage to break into the top 20.

Carbon emissions intensity is the most improved indicator for many of the top performing economies. However, emissions (and emissions trajectories) remain far too high in most countries. This is inconsistent with the objectives of the Paris Agreement on climate change.

Political and governance indicators have deteriorated across all of the major investable markets since 2012. Social scores have also generally worsened, compounded by the addition of income inequality to our suite of ESG indicators.

The US continues to drop down our rankings and is now in 25th place in our raw index and 64th place in the development-adjusted rankings. This was largely due to the deterioration in political and governance performance during the 2017 – 2021 Donald Trump presidency.

China’s macro ESG story is a nuanced one. There has been a reduction in corruption over the past decade, the emissions intensity of the economy has been falling, the country is a leader in renewable technology manufacturing and the government is taking steps to reduce income inequality. However, the use of, and investment in, fossil fuels is comparatively high for its level of development. China also scores low on other indicators.

Following Russia’s invasion of Ukraine its macro ESG performance has been heavily scrutinised. Unsurprisingly, political governance is the biggest drag on performance as President Vladimir Putin’s regime has steadily eroded freedom of expression and democratic institutions.

The global and development-adjusted ESG indices don’t directly take into account external and internal conflict, or the risks of conflict occurring in the future. We’re working on ways to systematically incorporate these factors into future versions.

Chart 1: Top ESG performers

Source: abrdn, UN, Yale EPI, IDEA, V-Dem, ICRG, Happiness Report, World Bank, World Inequality Database (as of Aug 2021)

All indicators have been indexed from 0 -100 and adjusted so that a higher number represents a better score.