Emerging markets may not be the obvious destination for your ethical investment. Rapidly expanding economies are consuming a lot of energy, pumping CO2 in return. Many of these markets suffer from legal and political problems that keep investors on their guard. BRIC legal systems have room for development. Their financial disclosure is still patchy.
However, BNP Paribas sees opportunities as it believes fast growth in these markets and increased inflows would create the need for a socially sustainable environment for investment.
“Our analysis has unearthed a number of particularly promising sustainable investment strategies in emerging markets. In each of these cases we see a real economic need linked to maintaining high growth rates, but also evidence that policymakers are recognising this need and are putting in place the necessary policy measures to facilitate this development,” the French bank said in its latest Sustainable and Responsible Investment (SRI) newsletter.
In other words, emerging market expansion creates growing environmental problems and thus a desire from emerging market economies for sustainable investments.
Emerging market countries are also most vulnerable geographically to climate change, said the bank. It’s targetting its investment in industries including education, water, waste, mobile phone banking, microfinance and clean transport. Among others, it likes Nine Dragons, a Chinese waste paper company and SABSEP, a Brazilian state owned sewage and water utility.