Emerging markets at different points of net-zero journey

GLOBAL policies are currently projected to limit global warming to about 3 deg C above pre-industrial levels by 2100, which remains far from achieving the Paris Accords goal of well below 2 deg C, preferably 1.5 deg C. Several countries have made net-zero commitments to meet this goal. Within emerging markets (EMs), the landscape varies considerably, ranging from countries that have announced meaningful carbon targets to those that have yet to declare any significant policies.

EM governments will need to adopt growth-enhancing fiscal and structural reforms that promote low-emission resilient investments, backed by productive and cost-effective climate policies, to achieve climate-compatible development. Against this backdrop, our objective to understand the climate commitments of our investee companies incorporates both local and global perspectives, recognising that the pace of decarbonisation and the associated strategies will differ globally.

Take China as an example: it is the largest carbon emitter in aggregate, yet its emissions per capita are lower than various developed nations. We therefore seek to understand local country, industry and company requirements when we integrate climate considerations into our investment process - a pragmatic and real-world approach. We also recognise that some industries will need to decarbonise more quickly than others, hence our approach is sector-specific, which also helps to prioritise our engagement efforts.