J.P. Morgan: Despite growing emissions, ESG focused investors should not overlook EM

J.P. Morgan: Despite growing emissions, ESG focused investors should not overlook EM

Emerging Markets
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Emerging markets pose particular ESG challenges. From an environmental perspective, CO2 emissions from emerging economies have grown rapidly over recent years, to almost 70% of the global total today.

With many investors increasingly focused on ESG this is one issue that has led some to question whether emerging markets should be avoided because of ESG concerns. As we argue in our recent On the Minds of Investors article – The case for ESG integration when investing in EM – this need not be the case. Emerging markets are not homogenous by country nor corporation, and therefore growth and sustainability can be reconciled through careful company research and selection as well as engagement to ensure that company business models can adjust to the regulatory change ahead. What is more, by investing and demanding higher ESG standards, investors can also help to accelerate the pace of change.

Annual CO2 emissions, billion tonnes

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Source: Global Carbon Project, Our World in Data, J.P. Morgan Asset Management. Emissions are from fossil fuels and concrete production only. Data as of 12 March 2021.