Climate investing is an opportunity for Emerging Markets

  • Delayed climate policies disproportionately impact lower income and emerging countries, challenging their transition paths to net zero targets: Private investments will be crucial to finance their transitions.
  • Mineral-rich countries, such as Chile and Indonesia, are better positioned to withstand the energy transition and sustain higher growth, presenting sectoral and commodity investment opportunities for global investors.
  • The next decade may be characterised by a reordering of asset class preferences driven by changing expected returns. India and emerging market equities ex-China look more appealing than developed markets.

Climate pathways are integral to economic and market expectations, and investors must increasingly focus their attention on the impact of the energy and climate transitions, particularly in Emerging Markets (EM). Last year’s record-breaking temperatures were a stark reminder that the global economic landscape is undergoing profound shifts; 2023 was the hottest year on record, with average temperatures exceeding 1.5°C of warming above pre-industrial levels.

The urgency of climate action disproportionately affects lower-income and emerging countries, which typically bear the brunt of extreme weather events. For many of these countries, the road to net zero carbon emission targets is challenging and will result in material GDP losses and lower growth standards by 2050. Regional dynamics are varied and countries that are rich in the minerals critical for the transition will fare better, leveraging these resources to offset the strains of climate mitigation and adaptation. Chile, for instance, is rich in lithium and copper, while Indonesia is first for the extraction of nickel and second for cobalt.

You can now read the full whitepaper at the link below