Fact or fiction: Does SI work in emerging markets?
Sustainability investing is well established in the West, though some doubt whether it can work in emerging markets battling with bigger issues. In fact, experience shows that emerging markets present both a huge investment opportunity and a distinct set of environmental, social and governance (ESG) risks and challenges.
• ESG adoption has been much lower in emerging markets
• It’s still possible to find sustainable equities and bonds
• Better governance and impact investment is also helping
Environmental threats include mass urbanization and deforestation, while the continuance of child or slave labor along with low pay presents social problems, and high levels of state or private ownership give rise to governance issues. Some emerging countries can’t adequately feed their own people, let alone adopt solar power or electric cars.