The UBS research paper,
entitled "Emerging Market Equities: Sustainable Investment Opportunities", found that as of
mid-2008, assets allocated to socially responsible investment (SRI) or sustainable investment
exceeded $50 billion in emerging markets. Another $250 billion in assets were managed by mainstream
investment managers who consider environmental, social, and governance (ESG) factors.
Referring to the global financial crisis, the USB research concluded that "emerging markets now
look set to recover faster than do the advanced economies and they look likely to continue to grow
at higher rates." UBS does distinguish between the larger emerging market economies, such as China
and India, where losses "have been cushioned by strong domestic demand," and smaller, export-driven
economies, where the effects of the crisis have been felt more acutely.
several areas in which sustainable investment could prove profitable. South Korea has recently
implemented a stimulus program that allocates a majority of its funds to renewable energy
technologies, while China intends to increase development of renewable energy sources to 20% of its
output by 2020.
Due to their competitive production costs, Chinese companies have come to
play a major role in the global solar cell manufacturing market. While most of the production has
been devoted to export, the Chinese government is promoting its domestic market for solar
technology. India has also implemented policies to promote solar cell manufacturing.
areas of development in emerging markets that could be of interest to sustainable investors include
sustainable transportation in China and affordable housing in Latin America.
research, UBS cited recent studies that found high portfolio turnover in emerging markets, making
integration of long-term ESG considerations difficult. Furthermore, standards and disclosure on ESG
issues need to be improved, and active ownership practices encouraged.
concluded, sustainable investors can participate in the growth of emerging markets by "investing in
companies that contribute to solving environmental and social challenges in emerging market