ESG - our latest global index

Nancy Hardie, Macro ESG Research Analyst,
and Yashaswini Dunga, Economist, Research Institute

Environmental, Social and Governance (ESG) has never been more important in a rapidly-changing world which has a great deal else to distract it right now. So we’re very pleased to share with you the highlights from the latest ASI global ESG Index.

Let's start with a chart.  As you can see below, the top performers in our index are largely European and Anglo-Saxon countries (although the US is notably absent). Japan and South Korea are the only Asian economies in our top 20.



Chart 1: Top performers in the latest update

Among this group of top performers, political and governance levels are strong. At the same time, environmental performance tends to be the weakest area overall but only by a small margin and with some outliers. Ireland, for example, is actually strongest on environmental scores. Spain and Italy score poorest on social factors, although this is largely due to weak employment-to-population ratios.


Politics, governance and pollution: still an issue

The deterioration in political and governance indicators across all of the below major investable markets since 2011 is striking. Populist forces have been rising in many of these countries and politics have moved towards the right in many cases. Social indicators have shown the greatest improvement, with education the most improved area for almost half of these countries.


Table 1: Deteriorating politics & governance and pollution remains an issue

Perhaps unsurprisingly, carbon-emissions intensity and air quality is where most of these markets show the weakest performance. This reflects the global economy’s ongoing reliance on fossil fuels. You can read more about this in our earlier research paper Going Green which takes a deeper look at the politics and policy on climate change in the US, EU, China, and India.


Leading the way with positive change

These emerging and frontier markets represent those with the greatest positive change in ESG ranking from 2011 – 2019. The greatest improvements have been made in politics and governance across all countries, with the exception of Benin. This is partly because these countries started from a very low base compared to developed markets. They therefore have the most room for improvement.


Chart 2: Major improvements in politics and governance among the most improved countries

Armenia’s exceptional ranking improvement is largely owed to its significant progress in free and fair elections, access to justice, freedom of expression and absence of corruption. Its previous government, comprising political elites, was forced out in 2018 following large protests. The country has been undergoing major political and structural changes over the past several years.


Development-adjusted ESG Index

To adjust our index for development bias in the ESG scores and rankings, we also have a version of the index that adjusts for per capita income levels in each country. This allows us to consider how we expect a low-income country to score on the index, given its own level of economic development.

The outperformers in these development-adjusted terms include some familiar ESG leaders like Sweden, Finland and Denmark. However, it also includes some African nations like Rwanda, Malawi and Niger (see Chart 3). The worst performing countries are mostly in the Middle East and Northern Africa. Oil-exporting countries tend to fare badly on the development-adjusted ESG index due, in particular, to their poor environmental performance. It is also notable that China shows up as a major underperformer on ESG in development-adjusted terms.


Chart 3: Outperformers and underperformers list mostly unchanged


Appendix – notes on how the index was assembled

Aberdeen Standard Investments established its Global ESG Index in 2018 to monitor the progress of 135 nations in meeting Sustainable Development Goals (SDGs) set by the United Nations in 2015. The proprietary index tracks 18 indicators aligned to the SDGs in an effort to address a dearth of quality data and transparency issues.

This year, our indicators of air quality and species protection have changed. The Environmental Performance Index (EPI) has stopped publishing the air quality indicator we were using previously. We now calculate this as an average of the normalised Particulate Matter (PM) 2.5, household solid fuels and ozone pollution indicators.

The EPI has not updated the species protection indicator we were using previously. The latest data point is from 2014, which is too old to incorporate in our 2019 index. We have chosen to use another species-protection indicator published by the EPI. This one uses remote sensing data, global biodiversity informatics and integrative models to map suitable habitat for over 30,000 terrestrial vertebrate, invertebrate and plant species at high resolutions.

Please note that all indicators are not comparable to last year’s index due to the revision of the historical data by the providers.



The value of investments, and the income from them, can go down as well as up and you may get back less than the amount invested.