ESG practices: Significant Gaps Exposed

– 48% of listed companies not embracing sustainability reporting

Story: Isaac AIDOO, Accra

A SURVEY by KPMG has revealed that just over half of Ghana’s listed companies are embracing sustainability reporting, with a reporting rate of 52%.

The findings underscore the growing importance of Environmental, Social, and Governance (ESG) practices in Ghana’s corporate landscape but also highlight significant gaps in transparency and accountability among listed firms.

Sustainability reporting trends across industries

According to the survey, 75% of companies reporting on sustainability do so through their parent or group companies, while only 25% report as standalone entities. This dynamic illustrates a growing recognition of sustainability disclosure within the Ghanaian business environment, though practices vary widely across sectors.

The banking industry stands out as the only sector where entities predominantly report ESG data independently. KPMG attributes this to the early adoption of the Sustainable Banking Principles introduced by the Bank of Ghana in 2019. These principles have driven banks to prioritize ESG practices and integrate them into their operations.

All companies listed on the Ghana Stock Exchange (GSE) in the beverages, mobile telecommunications, oil and gas, and personal goods industries report on sustainability. However, reporting rates vary in other industries:

• Banking: 80%
• Food producers: 67%
• Mining: Less than 50%

Notably, several industries, including forestry and paper, pharmaceuticals and biotechnology, real estate, and nonlife insurance, have no listed entities reporting on ESG practices.

Challenges of non-reporting

Despite the progress, 48% of listed companies on the GSE still do not report on sustainability issues. This lack of disclosure creates a critical gap in transparency, which hampers investor decision-making.

Without ESG data, investors struggle to assess the sustainability impact of their investments, which could potentially influence their decisions and reduce confidence in non-reporting entities.

Non-reporting also reflects missed opportunities for companies to demonstrate accountability and align with global trends emphasizing sustainability. As ESG reporting becomes increasingly vital for accessing international markets and funding, this gap highlights the need for greater regulatory oversight and corporate commitment to sustainability.

Regulatory and Industry Insights

The survey points to regulatory frameworks as a key driver of ESG adoption. For example, the banking industry’s comparatively high reporting rate suggests that mandates like the Sustainable Banking Principles can influence corporate behaviour. Expanding similar frameworks to other industries could encourage broader compliance with sustainability reporting standards.

Industries such as mining and food production, which lag in reporting rates, present opportunities for targeted interventions. Mining, with a 67% non-reporting rate, faces heightened scrutiny due to its environmental impact. Increased regulation and stakeholder engagement could accelerate ESG adoption in this sector.

The path ofrward

The findings emphasize the need for Ghanaian businesses to prioritize ESG reporting as a core part of their operations. This requires:

• Regulatory Incentives: Strengthening policies to encourage ESG compliance across all industries.
• Capacity Building: Providing training and resources to companies to help them implement effective reporting mechanisms.
• Investor Advocacy: Encouraging investors to demand ESG disclosures as a prerequisite for funding.

As sustainability becomes a critical component of global business practices, Ghana’s corporate sector must intensify efforts to bridge the reporting gap. By doing so, businesses can enhance transparency, attract investment, and contribute meaningfully to national and global sustainability goals.