ESG in Emerging Markets

Emerging markets are no longer passive players

Historically, ESG discussions and frameworks were largely driven by developed economies and Western regulatory bodies. Emerging markets were often viewed as recipients of these standards or as regions where ESG adoption was lagging due to focus on immediate economic growth. However, this perspective is rapidly changing.

• Growing Awareness & Urgency: Emerging markets are on the front lines of climate change impacts and social inequalities. The direct consequences of environmental degradation and social disparities are more acutely felt, driving an inherent urgency to address these issues.

• Investor Demand: Global investors, including institutional funds, are increasingly integrating ESG criteria into their investment decisions. To attract foreign direct investment and access global capital markets (e.g., through green bonds), companies and governments in emerging markets must demonstrate strong ESG credentials. This investor pressure is a significant catalyst.

• Regulatory Evolution: While some developed markets lead in mandatory reporting, emerging markets are also developing their own regulations and guidelines, often influenced by international standards but adapted to local contexts. This push for transparency is becoming a competitive necessity.

• Domestic Drivers: Beyond external pressures, local stakeholders – including civil society, consumers, and employees – are demanding greater accountability and sustainable practices from businesses and governments