The U.N. estimates that we must invest a staggering $5 trillion to $7 trillion annually to attain the 17 SDGs set forth in its Agenda for Sustainable Development by 2030. Achieving these global goals requires the human, technical and financial resources of governments at all levels and those of public and private businesses.
Emerging markets (EM) have more need for investments in infrastructure, technological innovation and educational improvements than developed markets. Accompanied by profound socioeconomic, gender and income inequalities, living standards in some EM nations are among the lowest in the world. EM countries are also more vulnerable to environmental and health-related issues, including access to clean water and rare diseases. These conditions make investing in emerging markets with an SDG focus especially significant.
We believe EM companies could benefit from the growth generated by the positive impact the SDGs intend to achieve. Attaining the SDGs could serve as a fundamental driver of growth in corporate revenues and earnings.
In turn, these could drive returns from equities and other assets.
Emerging Markets Sustainable Impact Report 2020 key highlights:
- Change Is Possible - using the Sustainable Development Investments taxonomy developed by Dutch pension investors PGGM and APG, we group the SDGs into five specific investment themes that provide pathways to achieving impact: healthcare, sustainable living, technological progress, education and environmental protection
- Measuring impact continues to be a challenge. This is especially true of emerging markets given that sustainability disclosure is limited. This challenge offers an opportunity for investors to do their own deep-dive impact research and conduct active engagement. As part of our focus on continuous improvement, we will continue to review our impact approach against industry standards and best practices to ensure alignment with our processes. We will also continue to work with our investee companies to improve the availability and quality of our reporting.
- How the portfolio impacts each theme
- Climate change - While several key issues related to ESG themes are important to investors, climate change remains at the forefront. In addition to having enormous financial consequences, climate change impacts many aspects of ESG investing. We expect asset owners increasingly to take the position that climate change poses risks to the global economy, financial systems and their portfolios.
- Active ownership - Engagement constitutes an integral part of our fundamental research process, and we seek to forge constructive dialogues with companies that contribute to more informed long-term investment decisions.
- Engagement case studies: Geely Auto Group and Hapvida Participacoes e Investimentos S.A.
- Proxy voting
Please click here for the full report.
