Sustainability and growth in developing economies can coexist harmoniously.
Investors are increasingly turning their attention to sustainability in emerging markets, drawn by lower environmental and social standards compared to developed countries. This shift is evident in the strategies of funds like Ökoworld Growing Markets 2.0, which focuses on ecology and sustainability.
Alexander Mozer, fund manager of Ökoworld, has a diverse portfolio that includes the Chinese electric vehicle manufacturer Nio, the Taiwanese bicycle manufacturer Giant Manufacturing, and Evergreen Marine Corp. (EMC), a container shipping company headquartered in Taipei. Notably, Telenor, a Norwegian mobile operator, is also part of Mozer's portfolio, with a strong presence in India, Eastern Europe, and Asia.
Emerging market investors are advised to consider sustainability aspects alongside traditional fundamental data. This approach is particularly relevant as many investors are currently attracted to emerging market economies, which are among the fastest growing in the world.
However, unrestrained economic growth in emerging markets has led to significant pollution and severe health impacts. To mitigate these risks, investors are advised to avoid companies with poor Environmental, Social, and Governance (ESG) records.
SMEs focusing on sustainability can significantly contribute to the economic growth of emerging markets while reducing environmental and social risks. These companies typically drive growth by introducing innovative, sustainable products and services that meet local needs, create jobs, and foster inclusive economic development, all while minimizing negative environmental impacts and social inequalities.
Sustainability-focused SMEs in emerging markets:
- Support local economies by creating employment opportunities and stimulating entrepreneurship, helping build economic resilience.
- Encourage sustainable resource use and cleaner technologies, reducing environmental degradation common in many emerging economies.
- Mitigate social risks by adhering to fair labor practices, promoting community engagement, and improving access to essential services.
- Attract ethical investment capital, such as from the Ökoworld Growing Markets 2.0 fund, which prioritizes investments in companies meeting high ethical and ecological standards.
The Ökoworld Growing Markets 2.0 fund invests specifically in emerging market companies that adhere to ethical and ecological criteria, thus channeling capital towards businesses that contribute to sustainable development goals. This targeted investment supports SMEs that efficiently balance economic growth with environmental stewardship and social responsibility, reducing systemic risks and contributing to long-term sustainable economic progress in these regions.
In summary, SMEs with a sustainability focus foster economic growth in emerging markets by generating inclusive jobs and innovations, while proactively managing environmental and social impacts, aligning with global sustainability frameworks endorsed by funds like Ökoworld Growing Markets 2.0.
[1] Source: Ökoworld Growing Markets 2.0 fund prospectus and website.
- Other than traditional sectors, investors in emerging markets should consider Environmental-Science projects, as they can contribute significantly to sustainable economic growth and reduce environmental and social risks.
- Education-and-Self-Development and sustainability-focused Small and Medium Enterprises (SMEs) in emerging markets, like those funded by Ökoworld Growing Markets 2.0, not only foster economic development but also align with the principles of the global sustainability frameworks, promoting ethical, ecological, and socially responsible business practices.
