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Unlocking the ESG investment potential in emerging markets

Investors should not focus solely on the companies with best-in-class ESG credentials; opportunities abound for those willing to look beneath the surface to assess emerging-market companies’ sustainability plans

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    • Sustainable investing is too often associated with the search for companies with best-in-class ESG credentials, but that focus can overshadow the investment opportunities in companies incrementally improving their approach, says Andrew Ness, portfolio manager at Franklin Templeton Emerging Markets Equity.
    • Sustainable investing is too often associated with the search for companies with best-in-class ESG credentials, but that focus can overshadow the investment opportunities in companies incrementally improving their approach, says Andrew Ness, portfolio manager at Franklin Templeton Emerging Markets Equity. Franklin Templeton
    Andrew Ness

    Andrew Ness

    Published Mon, Jul 11, 2022 · 05:50 AM

    Sustainable investing is more than about seeking companies with impeccable environmental, social and governance (ESG) profiles. It is also about uncovering companies that are improving their ESG footprints - and their disclosures go a long way towards signalling and evidencing such progress. Yet, across emerging markets (EMs), corporate ESG disclosures are uneven and broadly lag those in developed markets.

    Individual EMs are developing at different speeds, both in terms of stages of economic development as well as regulation. There are unique ecosystems and different drivers in each individual EM, as compared to developed markets.

    Investors relying solely on published information to assess EM companies’ sustainability plans risk missing the incremental change in trends. Therein lies the opportunity for investors who can look beyond the surface.

    ESGEmerging marketsWealth & Investing

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