The challenge facing emerging markets
In 2015, all the member states of the United Nations adopted the 17 Sustainable Development Goals – a collection of interlinked global goals designed to represent a "blueprint to achieve a better and more sustainable future for all". They seek to promote sustainable economic growth, advance social inclusion and safeguard the natural environment.
But overall progress has been far too slow, and there’s clear evidence that emerging markets are on average further away from meeting the SDGs than developed countries. If the SDGs are to be reached by 2030 – their due date – progress needs to speed up everywhere, but especially in emerging markets.
Inclusion in financial markets is key to achieving the SDGs
Unfortunately, emerging markets face a range of hurdles on the road towards attaining the SDGs. One of the most significant is gaining sufficient access to financing. And not only is more financing required for activities that help countries meet the SDGs, there’s also a pressing need to cut financing of activities that are in conflict with the SDGs’ aims.
The challenge for sustainable investors is to find ways of providing more financing to countries that are a long way off reaching the SDGs, while making sure it only finds its ways into activities that are in support of the goals and do not conflict with them. This requires a deep understanding of the impacts of companies’ activities on progress towards the SDGs.
Identifying companies’ impacts on progress towards the SDGs
Allocating to companies that contribute to the SDGs and operate in emerging markets is one way for investors to help these countries achieve the goals – but to be able to do so, they need to be able to identify such firms.
With this aim in mind, Robeco has developed an SDG Framework that is based on a three-step process to define to what extent a company makes a positive or negative contribution towards the goals.
We look at every company’s products and services, business conduct and whether it has been involved in any controversies to help us calculate a score on a seven-point scale for each SDG for each company. From there, we assign an overall SDG score to every firm. If a company has a negative score for any of the individual SDGs, it will receive a negative overall SDG score regardless of whether it makes a positive impact on any of the other SDGs.
Our SDG Framework helps us to integrate a consideration of the SDGs into our investment strategies. Once we have calculated an overall SDG score for the issuers in the investment universe, we can include the best companies in our investment process while avoiding investing in firms making a negative impact.
SDG-aligned investing in emerging markets
We have analyzed the impact on progress towards the SDGs of all the companies in the MSCI Emerging Markets Index using our SDG Framework. We found that 26% of firms have a negative impact on progress towards the SDGs, 22% do not make a significant contribution either way, and around 52% of companies contribute positively to the goals.
The chart below shows the proportions of companies in the MSCI Emerging Markets Index making positive (blue) and negative (purple) contributions to individual SDGs. For example, 35% of the companies in the benchmark contribute positively to SDG 9 – Industry, Innovation and Infrastructure. Conversely, 12% of companies have a significant negative impact on SDG 13 – Climate Action, while 2% make positive contributions towards this goal.
Some SDGs are not very investable: no companies support (or significantly harm) SDG 10 on Reduced Inequalities, which aims to reduce socioeconomic inequalities at a macroeconomic level that companies have little direct influence over.
There are plenty of opportunities to do good
There’s huge scope to invest in companies from emerging markets that are making a meaningful positive impact on progress towards the SDGs and that also have a promising growth outlook. Some of the areas providing the biggest opportunities include:
Access to finance for everyone
Improved access to healthcare solutions
Nutrition and better agricultural productivity, especially in low-emission food sources
Sustainable land use
In our paper, we focus on the investment opportunities in the education and sanitation sectors.
When it comes to education, there are over 30 companies listed in emerging markets that form part of Robeco’s eligible universe and are involved in schooling, learning systems and education-related publishing and REITs linked to education services. As well as helping to improve access to education in low-income countries, many have considerable potential to grow their sales.
Meanwhile, there’s a pressing need to improve sanitation in emerging markets as some 827,000 people in low- and middle-income countries die each year as a result of inadequate access to water or sanitation or poor hygiene. Water utilities, companies involved in environmental services and personal care and home appliance firms can have a major impact on improving sanitation, and we’ve identified 96 listed companies in these areas in emerging markets that could represent attractive investment opportunities.
There is still considerable scope for investors to make a positive impact in emerging markets. Robeco’s SDG Framework enables us to do just that.
当資料は情報提供を目的として、Robeco Institutional Asset Management B.V.が作成した英文資料、もしくはその英文資料をロベコ・ジャパン株式会社が翻訳したものです。資料中の個別の金融商品の売買の勧誘や推奨等を目的とするものではありません。記載された情報は十分信頼できるものであると考えておりますが、その正確性、完全性を保証するものではありません。意見や見通しはあくまで作成日における弊社の判断に基づくものであり、今後予告なしに変更されることがあります。運用状況、市場動向、意見等は、過去の一時点あるいは過去の一定期間についてのものであり、過去の実績は将来の運用成果を保証または示唆するものではありません。また、記載された投資方針・戦略等は全ての投資家の皆様に適合するとは限りません。当資料は法律、税務、会計面での助言の提供を意図するものではありません。 ご契約に際しては、必要に応じ専門家にご相談の上、最終的なご判断はお客様ご自身でなさるようお願い致します。 運用を行う資産の評価額は、組入有価証券等の価格、金融市場の相場や金利等の変動、及び組入有価証券の発行体の財務状況による信用力等の影響を受けて変動します。また、外貨建資産に投資する場合は為替変動の影響も受けます。運用によって生じた損益は、全て投資家の皆様に帰属します。したがって投資元本や一定の運用成果が保証されているものではなく、投資元本を上回る損失を被ることがあります。弊社が行う金融商品取引業に係る手数料または報酬は、締結される契約の種類や契約資産額により異なるため、当資料において記載せず別途ご提示させて頂く場合があります。具体的な手数料または報酬の金額・計算方法につきましては弊社担当者へお問合せください。 当資料及び記載されている情報、商品に関する権利は弊社に帰属します。したがって、弊社の書面による同意なくしてその全部もしくは一部を複製またはその他の方法で配布することはご遠慮ください。 商号等： ロベコ・ジャパン株式会社 金融商品取引業者 関東財務局長（金商）第２７８０号 加入協会： 一般社団法人 日本投資顧問業協会