An article by: Ahmed Moustafa

The debate over Environmental, Social, and Governance (ESG) standards is prevalent globally, addressing ethical, environmental, and financial impact issues influenced by different cultures and beliefs. A universal standard is challenging due to each country’s unique values and regulations, making it difficult to achieve. The effects of ESG standards are subjective and vary in evaluating whether companies meet them. The West is currently leading the charge in ESG standards due to its large markets, potential investors, and stringent corporate responsibility laws.
Countries like the US have the Dodd-Frank Act, SEC’s conflict of interest rules, and Sarbanes-Oxley (SOX) legislation, which encourages companies to adhere to higher ESG standards. The governance and financial impact of ESG standards are more prevalent in the West, with companies reporting sustainability results to the SEC and adhering to various regulations regarding ESG performance. The debate over ESG standards is ongoing, and it remains to be seen how long this trend will last and which other countries will eventually join suit.

SCO countries may achieve better ESG levels properly

The Shanghai Cooperation Organization (SCO) is a group of Central Asian countries, including China and Russia, working together to enhance economic, political, and security ties. With the introduction of the United Nations’ Sustainable Development Goals (SDGs) in 2015, SCO countries have shown a keen interest in Environmental, Social, and Governance (ESG) initiatives, particularly in sustainable development. To promote and strengthen ESG standards in the region, SCO countries have signed numerous agreements, launched programs like the SCO Sustainable Development Fund, and established the Shanghai Cooperation Organization Center for Energy and Sustainable Development.

However, achieving better ESG levels in the region requires addressing several challenges. One major issue is the lack of accountability across countries, as existing frameworks and policies may limit their impact. This is particularly evident in the case of climate change, where countries have yet to agree on binding agreements. Additionally, there is a lack of agreement on key ESG dimensions such as public disclosure on waste management and safety.

Despite these challenges, with concerted efforts and commitment to achieving better ESG levels, SCO countries will be well-positioned to make significant strides towards creating a more sustainable future. They are also considering the possibility of having their own regional standards, considering their different environmental, social, and governance climates compared to Western countries. Developing regional standards should consider the diverse needs of the countries, such as poverty, education, healthcare, and access to clean water.

Regional oversight of the standards is also essential to ensure they are being adhered to. This would involve creating an entity to monitor and audit the standards, providing guidance and support when necessary. The SCO has the resources and expertise to create a regional regulatory body to ensure that any standards developed adhere to international best practices.

SCO countries are entitled to obtain compensation from the West to apply ESG standards

The countries belonging to the Shanghai Cooperation Organization (SCO) have experienced and still have an increasing impact from the Western interventions in their economic affairs, as well as from the pre-existing socio-economic inequalities. Those nations are part of an economic group that was founded in 2001. Currently, the SCO countries represent three billion people and include major economies like Russia, China, India, and Kazakhstan, among others. The organization aims to build strong economic and bilateral relationships among its members. It also seeks to address regional challenges such as climate change, poverty, and energy security.

Considering the developing world is still lacking in the implementation of international environmental, social, and governance (ESG) standards, it is only natural that the SCO nations ask for some form of reparation from the West, which has implemented these ESG codes in the global markets. In the last decade, initiatives have been made in order to provide financial help to countries and companies in order to diversify their investments and promote responsible investing practices.

Once the rest of the world understands the importance of applying ESG codes, the SCO countries should receive equal treatment and access to obtain compensation in order to apply these codes. The application of ESG codes would result in an increase in transparency, efficiency, and sustainability of these countries’ economies and encourage investment in a variety of sectors.

Ultimately, the most beneficial outcome for the SCO ex-countries would be to gain equitable access to the international markets and to be part of the global economy as any other developed nation. However, the only way to achieve this is to obtain compensation from the West in order to apply ESG codes. This would ultimately drive the SCO nations toward a more sustainable future.

AI and big data in SCO countries may develop ESG standards

There is significant potential for Artificial Intelligence (AI) and Big Data in SCO countries to help develop Environmental, Social, and Governance (ESG) standards that provide meaningful, data-driven insight into long-term sustainability practices. Big data analytics allows organizations to collect, store, and analyze large amounts of data to understand and predict customer needs and business performance. AI, specifically machine learning and deep learning, can be used to accurately assess the impact of practices on ESG ratings.

By looking at performance data, companies can easily identify potential improvement opportunities for ESG ratings and receive in-depth insights into the impact of any proposed changes on overall social and environmental outcomes. AI and big data can also provide real-time feedback to companies on their ESG performance, allowing them to continuously monitor and optimize their practices to meet ESG goals.

Additionally, AI and big data technology can be leveraged to constantly monitor compliance with ESG frameworks within SCO countries and alert organizations of changes that may require adjustments to their existing ESG policies. In sum, AI and big data technologies in SCO countries have great potential to help address the social and environmental sustainability challenges of today, allowing companies to develop and maintain ESG standards that provide meaningful value to stakeholders.

AI companies in SCO countries that can develop ESG standards

AI is becoming increasingly important for implementing ESG (Environmental, Social, and Governance) standards in the SCO (Shanghai Cooperation Organization) countries. There are a number of AI companies that have been established in these countries to meet the needs of their growing economies.

In China, established companies like Alibaba and Baidu have been developing new algorithms and software that can be used to track and measure ESG metrics. In India, AI-based companies such as TCS, Wipro, and Infosys have all been busy developing frameworks and software that can be used to measure and assess ESG-related criteria. In Russia, companies such as Yandex and Sberbank are driving innovation with their own AI technology, which can help companies in the region more effectively assess the sustainability of their operations.

AI companies in Kazakhstan, Uzbekistan, and Kyrgyzstan are also making their mark in this space, with startups such as Cognitive Technologies and DataArt all leveraging their AI capabilities to improve ESG management and reporting processes in these countries. As the SCO countries continue to develop their economies, AI companies in the region should continue to play a central role in helping the countries implement ESG standards.


COP27 Egypt and its Correlation to SCO Countries ESG Standards

The Conference of the Parties 27 (COP27) hosted by Egypt is a unique opportunity for Egypt and the Shanghai Cooperation Organization (SCO) member states to come together to discuss ways to collaboratively advance their respective environmental, social, and governance (ESG) standards. Egypt is already taking substantial measures to reduce its carbon emissions, promote renewable energy and green technologies, and reduce air and water pollution.

Additionally, Egypt has set up the Egypt Climate Change Commission to develop a comprehensive 2030 strategy to reduce greenhouse gas emissions by 30 percent and transition to a climate-resilient economy. Alongside Egypt’s efforts to reduce its environmental footprint, the SCO countries also have ambitious plans to promote renewable energy, carbon emission reductions, resource utilization, and smart city development.

In particular, Russia has invested heavily in renewable energy and energy efficiency research, China has pledged to reduce its energy intensity by 15 percent by 2020, and India has committed to producing at least 40 percent of its electricity from renewable sources by 2030. The participation of the SCO countries in COP27 Egypt provides an unparalleled opportunity to develop global ESG standards, reduce regional disparities in energy and resource use, and establish clear metrics for progress in climate change mitigation.

Consequently, COP27 Egypt provides a unique platform to connect these various countries to prioritize collective ambition for reducing energy intensity, enhancing energy security, and improving energy access. Moreover, the development of multi-lateral partnerships can also be leveraged to ensure that best practices and innovation in ESG standards are shared between countries. Ultimately, successful cooperation between Egypt and the SCO countries during COP27 Egypt will not only foster global ESG standards but also extend to supporting broader objectives of the United Nations Sustainable Development Goals.

To conclude, the global debate on ESG standards addresses ethical, environmental, and financial impacts, challenging to achieve universal standards due to unique values and regulations in each country. With the introduction of the United Nations’ Sustainable Development Goals (SDGs) in 2015, SCO countries have shown a keen interest in Environmental, Social, and Governance (ESG) initiatives, particularly in sustainable development. SCO countries are entitled to obtain compensation from the West to apply ESG standards. AI and big data strong companies in SCO countries may develop ESG standards. Egypt’s hosting of COP27 was a unique opportunity for Egypt and SCO member states to collaborate on advancing their respective ESG standards.

Director of the Center for Asia Studies

Ahmed Moustafa