Sustainable Investing in Emerging Markets

Sustainable investing gets worldwide increasing popularity. This chapter sheds light on sustainable investments with focus on Emerging Markets (EM). Motivational aspects are explained by intrinsic, regulatory, and monetary developments and research on new frameworks, e.g. the ESG Efficient Frontier, is presented. It is illustrated how ESG can be integrated into the fund universe and the role of ratings. Investors can map ethical aspects, while the inclusion of sustainable criteria also offers return opportunities. Some investment companies claim that the added value of Socially Responsible Investing in EM is even higher than in developed markets. Therefore, different approaches of active as well as index tracking ESG funds are discussed. Current trends, such as thematic funds, impact investing resp. investment vehicles, e.g. microcredits, are also examined. Hence, comparisons are given between developed markets and EM looking on performance and persistence as well as country and sector specific diverseness and perspectives. The findings will be concluded with an overall impact of sustainable investment.