A new study shows that as the global push to invest more sustainably gains momentum, more and more African countries are putting in place financial market rules that address environmental, social, or governance issues.

Official Monetary and Financial Institutions Forum (OMFIF), a think tank, and Absa, a South African bank, looked at 26 countries and found that 17 of them now have policies that focus on sustainability. This is up from 12 last year.

As addressing climate change has moved to the top of the global agenda, more regulators have required environmental disclosures to stop "greenwashing," which is when companies and other groups lie about what they are doing to help the environment.

The move comes at a time when more investors want to track and mine ESG-related data to pick winners in the transition to a low-carbon economy and when authorities are trying to set a global baseline for how companies talk about climate change.

This year, Uganda's central bank made a strategic five-year plan that includes building a "sustainable financial system." Meanwhile, the Namibia Stock Exchange required listed companies to set up a social, ethical, and sustainability committee.

South Africa, Mauritius, Kenya, and Egypt are at the top of the report's list of countries with the best sustainability policies because they require banks to take climate change into account when managing risk and reporting.

Foreign reserves measured by months of import cover fell in most countries in 2021, said the OMFIF-Absa report, which also assesses African financial markets on factors including market depth, foreign exchange access, and legal standards.

However, it recognised advances in the enforcement of legal agreements in Nigeria and Ghana, as well as plans for Uganda, Ethiopia, and Rwanda to improve their adoption of international financial standards.

Source: Reuters

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