The discussions included how AMs can adopt ESG best practices for data quality, assessment frameworks and active stewardship for their EM investing strategies.
Panel members shared their experiences of, and insights on:
The scope of financial materiality when retuning global ESG frameworks for EM investing - should the yardsticks be different from those used in the developed markets
Integrating EM-specific ESG risks into the investment process
Addressing the issue of weak ESG data disclosures among EM companies
How asset allocators are assessing ESG integration into EM investing
Strengthening ESG stewardship initiatives to create a bigger impact
Our latest report
Time EM regulators raised the bar on ESG disclosure
While EMs lead in market performance of their ESG funds, when compared to DMs, the relative paucity of ESG data and weak disclosure standards in EMs makes it a challenge to separate the wheat from the chaff. This needs to be addressed proactively, and urgently, for the buoyancy to sustain.
Addressing these lacunae will require securities regulators and stock exchanges to mandate tighter ESG disclosures, taking note of the ESG taxonomy proposed by the European Union (EU). Varying reporting and corporate governance standards and information gaps in the EMs make it imperative for investors to conduct proprietary research and engage directly with a company.
Asset allocators too are demanding this from their managers. The Greenwich Global ESG Research 2019 Survey identifies two key differentiators for fund managers: the ability of a fund manager to work proactively with companies in influencing their ESG practices, and the manager’s activism levels through proxy voting.
CRISIL and S&P Global Trucost webinar: ESG best practices for Emerging Markets