The Emerging Markets Transition Investment (EMTI) project was created to accelerate investment into net-zero transition of Emerging Markets and Developing Economies (EMDEs) – where the financing gap is the widest. The International Energy Agency’s latest findings evidence the stark lack of capital by showing that EMDEs outside China account for less than one‐fifth of total clean energy investment, despite representing two thirds of the global population.

To identify solutions for investment mobilisation in EMDEs, the EMTI project has organised two round-table discussion so far. The second discussion, held on 13 October 2022, focused on responsible and effective engagement in EMDEs and resulted in the second paper in the Code Red! series, the “Call for Action on Responsible Corporate Engagement in Emerging Markets“.

The discussion highlighted the principal need for localised approaches to facilitate the transition towards net zero. To develop engagement approaches that consider regional differences affecting corporates, the paper lists the guiding principles and practical recommendations for asset owners, asset managers and regulators.

Guiding principles for responsible and effective engagement in emerging markets include:

  1. Establishing a local approach;
  2. Integrating the Paris Agreement ‘common but differentiated responsibilities’ principle into engagement;
  3. Building trust by undertaking ongoing engagement;
  4. Sharing knowledge between global and local investors; and
  5. Developing flexible engagement asks, which consider feasibility of ambitious target setting.

Building on these principles, the paper offers practical recommendations for implementation. The recommendations are organised into four themes, three of which are relevant for asset owners and asset managers, while the fourth theme – “Encourage more stewardship and knowledge sharing in EMDEs” – offers specific recommendations for regulators on how to encourage engagement to speed up the energy transition.

About the Emerging Markets Transition Investment (EMTI) project

The Emerging Markets Transition Investment (EMTI) project was organized to identify practical, near-term solutions to accelerate investment towards the net-zero transition of EMDEs. The project is supported by the Net Zero Asset Owner Alliance (NZAOA), Nature and Climate Finance under the World Economic Forum (NCF), and the EU-ASEAN Business Council (EU-ABC). The EMTI project organized two webinars on Net Zero in ASEAN and Africa. In June 2022, the project organized the first roundtable on barriers for transition investment in EMDEs, which resulted a paper with twelve practical recommendations to accelerate emerging markets’ transition investment.

About the Net-Zero Asset Owner Alliance

The Net-Zero Asset Owner Alliance is a member-led initiative of 85 institutional investors, with over US$11 trillion in assets under management, committed to transitioning their investment portfolios to net-zero GHG emissions by 2050. The Alliance members were the first in financial industry to set intermediate targets (aligned with the Paris Agreement schedule) and they report on their progress annually. The Alliance is convened by UNEP FI and PRI and is supported by WWF and Global Optimism.