Advancing sustainable investment in emerging markets: A progress update

2024 seemed to mark a decisive shift in sustainability and sustainable investing, one with the potential to reshape the global financial system. For the first time emerging markets and developed economies (EMDEs) were placed at the centre of the discourse. Well-respected groups such as IIGCC and GFANZ set up dedicated workstreams focusing on sustainability in these countries. It was widely acknowledged that efforts to reach net zero an d meet the UN SDGs needed to acknowledge EMDE needs and challenges to be successful.
Make no mistake – this was an inherently positive development. Getting finance to EMDEs is critical for their energy transitions, to meet the UN SDGs and fund sustainable economic growth more generally. To increase the momentum, in 2024 World Benchmarking Alliance and a group of supporters (including asset owners, asset managers and investor groups) announced a new project focused on sustainable investment in EMDEs.
We encouraged asset managers to address a potential blocker towards increased capital flows – their own sustainability policies and strategies. While counterintuitive, evidence suggests that the ESG positions of some asset managers may be causing them to avoid investing in – or even divest from – EMDEs.
To help asset managers mitigate this risk, in September 2024 we created several best practice examples highlighting practical steps they could take to address the issue. In December 2024 we asked the senior leadership teams of 34 asset managers within our Financial System Benchmark to disclose how they were addressing the issue. And in January 2025 we published the latest iteration of the benchmark, which included an assessment of asset managers on this topic.
The benchmark results show that while some financial institutions are starting to consider the needs of EMDEs, this is not yet widespread. 34% of the firms within the Financial System Benchmark are now disclosing their operations by country, including EMDEs. This is a positive step. However, in terms of managing inadvertent divestment from EMDEs, none of the asset managers we assessed are currently taking meaningful action to mitigate this risk.
When we spoke to asset managers in December we were encouraged by the many constructive responses we received. All of the investors we spoke to agreed on the importance of the topic. However the benchmark results show that this positive sentiment must now be translated into real action. That is why we are again calling on asset managers within the Financial System Benchmark to disclose how they are managing this risk, in line with the best practice examples we developed. Asset managers should make these disclosures no later than August 2025 so they can be included as part of our next benchmark assessments. These will take place in the second half of 2025, ahead of the publication of our next benchmark in January 2026.
WBA will continue engaging with asset managers on this issue throughout 2025, and we are also ready to help asset managers as they produce the disclosures. We encourage asset managers to reach out to us directly if they need assistance.
Finally, we are also keen to work with other likeminded asset owners and asset managers on this project, so if you’re interested in collaborating please reach out to us at info.financial@worldbenchmarkingalliance.org.