There seems to be a consensus that sustainability investing in emerging markets is significantly more difficult as compared to developed markets. Is that true?
Problems often cited include:
- There is no disclosure in emerging markets
- Developed markets companies are well ahead of emerging markets peers when thinking about sustainability
- Engagement is difficult to implement in emerging markets
In partnership with Stewart Investors, this webinar will attempt to provide a counterpoint to the prevailing consensus. Notwithstanding the difficulties, we will consider
- What ESG scores are missing out on in emerging markets
- Why some emerging market companies are at the coalface of ‘design for sustainability’
- Why engagement is an earned right
Transcript (with timings)
02:25 – Is sustainable investing in emerging markets really possible?
04:45 – There are 20,000 investable companies in the emerging markets.
05:37 – Sustainability is a simple concept that has been complicated somewhat by the investment industry.
07:04 – Hundreds of millions of people in emerging markets have been lifted out of poverty in the last 30 years. Can this ‘high human development’ continue?
09:41 – A company might be delivering housing outcomes, say a cement company providing materials for housing in the developing world now, but if it’s powered by coal fired energy and carbon intensive fossil fuels, that’s not going to be a good outcome in the long term.
12:07 – People in emerging markets are experiencing the current ESG challenges, eg. soil degradation, inequality, etc – more intensely that the developed world.
13:01 – The dairy industry is a great case study for emerging markets. Vitasoy is a HK-based family business that is well positioned to help solve challenges that developing countries are experiencing.
15:18 – ESG scoring methodologies do not necessarily address real-world issues. Not everything that matters can be measured, and not everything that is measured matters.
19:51 – Forcing everything into numbers means the investment industry sometimes misses the point.
23:21 – Are developed market companies ahead of the emerging market peers in terms of sustainability?
27:31 – Corporate stewardship is an important factor for sustainability. In emerging markets, control of a company is often quite different to developed market companies.
29:42 – Family-owned businesses can present governance challenges.
36:57 – An example of successful a corporate engagement in emerging markets
42:08 – Differences between owning state-owned enterprises (SOEs) vs other companies
44:42 – Are returns affected by sustainability factors?
Presenter: Jack Nelson, Portfolio Manager, Stewart Investors
Facilitator: Teik H. Tan, Executive Director, Investment Innovation Institute [i3]
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