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Abortion rights in Emerging Markets and what it means for ESG

  • We analyse data on abortion rights and incidence in emerging markets following the overturning of Roe v. Wade in the US

  • India and Taiwan are among the most liberal; Middle East generally most restrictive; wide variety in Africa, Asia, LatAm

  • The abortion law reversal again questions if EM deserves its tag of being generally less ethical (ESG-friendly) than DM

Abortion rights in Emerging Markets and what it means for ESG
Hasnain Malik
Hasnain Malik

Strategy & Head of Equity Research

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Tellimer Research
2 July 2022
Published byTellimer Research

The Dobbs decision on 24 June in the US Supreme Court to overturn Roe v. Wade removed the constitutional right to abortion, despite five decades of precedent, enabling individual states to ban abortion. Consistent with its deep cultural and political divide, the US is likely to bifurcate between states where abortion is banned and where it remains broadly allowable.

The US abortion law reversal again questions if emerging markets deserve their tag of being generally less ethical (ESG-friendly) than developed markets. To the degree that global institutional funds bother with the sort of country screens for ethical standards that their ESG branding surely demands, independent of whether formal economic sanctions are applied, then metrics of personal freedoms deserve at least as much attention as metrics of political ones.

Country governance standards are included in our EM Country Index and, below, we flex the weight of this factor to see the impact on index scores.

Abortion in emerging markets

We summarise data on abortion rights, abortion incidence and the female labour participation rate in emerging markets in light of this momentous decision in the US.

  • India and Taiwan have among the most liberal abortion laws in emerging markets, with the Middle East region generally most restrictive, and with wide variation in Africa (eg liberal South Africa versus restrictive Egypt), Asia (eg India versus the Philippines), and LatAm (Argentina versus Jamaica).

  • The incidence of abortion is relatively high in Kenya in Africa, Vietnam in Asia, Georgia in Europe, and Peru in LatAm. Data on which to base estimates are insufficient in the Middle East and North Africa.

  • Liberal abortion laws are not always well correlated with high female labour force participation rates.

Abortion laws across developed and emerging markets

Abortion in the developed and emerging markets

Bearak et al. found that countries with highly restrictive abortion laws are not well correlated with a lower incidence of abortion but they are correlated with higher rates of births from unintended pregnancy. The incidence of abortion was c40 per 1,000 women between the ages of 15 to 49 in both a sample of countries where, in broad terms, abortion was illegal and where it was legal. They did not investigate how changing laws on abortion affected the incidence of abortion.

Separately, countries where abortions are most restricted are well correlated with a higher incidence of unsafe abortions, according to Ganatra from the World Health Organisation's Prevention of Unsafe Abortion Unit.

Female labour force in emerging markets

Abortion rights are not always well correlated with high female labour force participation.

  • Peru has a more liberal abortion law than Mexico and it also has a much higher female labour force participation rate.

  • However, India has a liberal abortion law, whereas Egypt has a restrictive one, but both have similarly low female labour force participation.

Female Labour Force Participation in emerging markets

Our EM Country Index in this context

The Tellimer EM Country Index weights 28 fundamental factors on growth (short and long term), policy credibility, politics, sanctions, ESG and, for an equity markets version, two additional ones on valuation and liquidity.

The weights in the index can be changed in order to model different global themes and portfolio styles.

Country governance standards — a composite score of personal freedom, political stability and absence of violence/terrorism, government effectiveness, regulatory quality, rule of law, control of corruption from the World Bank — are included in the fundamentals-only version of this index with a 7% weight and personal freedom, alone, has a 1.2%.

Below, we chart country index scores where:

  • Personal freedom is accorded a 10% weight in the overall index (from 1.2%) and all other factors are reduced pro-rata;

  • The freedom component of the governance standards factor is substantially reduced for the US from a number similar, in emerging markets, to South Korea, to a number similar to the Philippines, where abortion is banned outright.

Tellimer EM Country Index sensitivity to higher weight for personal freedom and lower US score for personal freedom

For full access to our EM Country Index and our Country Investability Matrix dataset, which includes numerous other ESG-related metrics, contact sales@tellimer.com.

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When countries behave badly: The tortuous morality of ESG investing (March 2022)