Sustainable investing in emerging markets?
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.
All of which makes sense. If there’s any place where people would benefit greatly from SRI, it’s probably emerging markets. SRI, as the name suggests, targets ethical investments, evaluating them through environmental, social and governance criteria (ESG). With the global downturn, the world has now turned to emerging markets, namely the BRIC economies – Brazil, Russia, India and China – which Goldman Sachs predicts will be the biggest economies alongside the United States in 2050.
But if emerging economies were to attract more SRI investment, they must do a lot more. Some 70 percent of investors surveyed in 2009 by the Social Investment Forum, a US non-profit association for SRI professionals, saw the lack of corporate ESG disclosure there as their biggest concern.
Water investments
A growing number of Investors, including state-owned funds, are looking to invest in water to benefit from efforts to tackle climate change.
According to multi-asset manager Armstrong Investment Managers, less than 0.01 percent of water is easily accessible freshwater and global water use has tripled since 1950 — increasing faster than the world’s population.
“Demographic and climate changes will lead to two thirds of the population inhabiting areas with scarce water,” the firm says.
Armstrong likes water equipment and water treatment stocks and water utilities as these should benefit from sustainable growth opportunities.
Norway’s $350 billion sovereign wealth fund is aiming to invest 20 billion crown ($3.24 billion) investments over the next five years into water and other environmental technologies, such as carbon-capture storage and waste and pollution management.
The Norwegian fund says water was an important input or production factor for about 1,100 companies in its, whose combined market value is some $43 billion.
its very exciting news.indian leading firm should also invest in water management
It’s nickel and dime time for banks
It’s nickel and dime time for banks as they come under pressure to cut costs in order to survive the worst financial crisis in 80 years.
According to banking sources, a U.S. bank in Canary Wharf has banned colour printing and has asked employees in the back office to chip in 25 pounds each for the office Christmas party.
A bank in Mayfair has told its employees to only hail cabs on the street instead of booking on the phone. Another bank in the City has pushed back the time employees can take taxis home to 9.30pm from 8.30pm previously.
A senior banker from the collapsed bank Lehman Brothers, soon to be transferred to Japanese bank Nomura, ordered a glass of tap water at a meeting in a restaurant.
Know any more belt-tightening measures being implemented? Contributions welcome.
does ones’ heart not bleed for these overpaid, incompetent, bankers……who got us into this mess in the first place..
Water, water everywhere
British water companies announced a plan earlier this week to increase household water bills by up to 4.5 percent above inflation between 2010 and 2015.
A pain for households, yes. But such increases underline a trend that may prove tempting to investors searching for new commodity assets as oil, gold etc tumble from their peaks.
The water index on the International Securities Exchange, which includes companies engaged in water distribution, water filtration, flow technology and other water solutions, has risen more than 5 percent since January.
World water consumption could also double over the next 20 years – according to a report from rating agency Moody’s economic research arm — and at current growth rates, water demand by 2025 would exceed the available supply by 56 percent.
Water demand could rise because of climate change which trigger more frequent droughts, increased migration to cities and industrialisation of emerging economies.
Desalination could offer one supply-side solution, although it’s costly. “(It) requires large amounts of energy as well as specialised and expensive infrastructure. Yet as fresh water grows scarce, this could become more common,” says Christin Li, economist at Moody’s economy.com.
But is it a liquid asset?
Concerning efforts to confront climate change, microfinance emerges as an important sector with a unique ability to help those who are the most vulnerable. For more information on what microfinance institutions can and are doing to curb global warming and assisting the poor to adapt to a changing environment, I would direct you to the paper Climate Change and Microfinance. Published in November 2009 by Asif Dowla, a professor of economics at St. Mary’s College of Maryland, the paper addresses the dangers presented by climate change to the poor and the tools that microfinance institutions can implement to help their clients. These tools range from disaster plans to weather insurance and are geared towards enabling the poor to continue to move out of poverty in the face of global warming.
With the goal of socially and environmentally sustainable economic development, microfinance institutions, at their base, help the world’s poorest by providing them with the capital they need to create a steady income for themselves. Looking forward to an uncertain future, the services that they offer and the relationships that microfinance institutions have built with their clients have become even more important. Through innovation and the expansion of their services microfinance institutions can remain sustainable while helping their clients move out of poverty.
Sincerely,
Remy Olson
Grameen Foundation