Emerging market investments: Achieving triumph through environmental, social, and governance considerations.
In the dynamic world of global finance, Nordea Asset Management stands out as a pioneer in sustainable investing. For years, the firm has integrated Environmental, Social, and Governance (ESG) analysis as a fundamental component in the investment process of its ESG Stars products. This approach is particularly evident in their Emerging Stars Equity Strategy.
The Emerging Markets (EM) are rapidly evolving into an economic powerhouse, driven by young labour forces, a growing middle class, and high economic growth. These markets are home to companies with immense potential, and Nordea Asset Management is capitalising on this by focusing on long-term sustainability and positive impact, rather than just financial returns.
The strategy is simple yet effective: only those companies that pass the ESG screening come into question for an investment in Nordea's ESG Stars products. This approach allows investors to contribute to positively and sustainably changing the world, especially in emerging markets.
Nordea Asset Management works closely with companies to improve their ESG considerations, such as working conditions and carbon footprint. Companies must also be leading in ESG to be eligible for the Nordea Emerging Stars Equity Strategy.
The growth of these globally leading companies from emerging markets is driven by several key factors. These include reaccelerating growth in major emerging economies, strong sectoral drivers like technology, corporate governance reforms, innovation and venture capital activity, commodity price increases, and favourable currency dynamics.
When it comes to Nordea's incorporation of ESG considerations in their Emerging Stars Equity Strategy, the firm employs practices such as screening for ESG risks, emphasising companies innovating in sustainability, avoiding companies with significant ESG controversies, and conducting extensive own analyses and dialogues with decision-makers of the companies.
In summary, Nordea's Emerging Stars Equity Strategy identifies long-term winners by combining fundamental growth drivers in emerging markets with rigorous ESG analysis to select companies positioned for sustainable value creation over the long horizon, consistent with industry best practices.
It's important to note that this document is promotional material for Nordea Asset Management, providing information on their specific expertise areas. However, it does not constitute investment advice or a recommendation to invest in a financial product.
The document is copyrighted by the legal entities of Nordea Asset Management and their respective branches and/or subsidiaries. ESG is particularly important for emerging market companies due to their exposure to stronger risks, such as working conditions, human rights, corruption, environmental issues, lax regulation, or business ethics.
The 18-member Responsible Investment Team at Nordea Asset Management works hand in hand with the portfolio managers and creates a comprehensive ESG scoring for each investment candidate. The Emerging Stars Equity Strategy of Nordea considers only companies seeking structural growth opportunities and secure sustainable competitive advantages for their portfolio.
Despite the challenges in the reliability of collected ESG data, Nordea's investment team is committed to identifying long-term winners among Emerging Markets (EM) companies and engaging in dialogues to support improvements in working conditions or reduction of CO2 footprint.
[1] Source: Nordea Asset Management, "Emerging Markets: The Next Growth Engine", 2021. [2] Source: Nordea Asset Management, "ESG Investing: A Winning Strategy in Emerging Markets", 2020. [3] Source: Nordea Asset Management, "Innovation and Sustainability: The Future of Emerging Markets", 2022. [4] Source: Nordea Asset Management, "The Role of ESG in Emerging Markets", 2019. [5] Source: Nordea Asset Management, "Commodities and Emerging Markets: A Growing Synergy", 2020.
The science of Environmental, Social, and Governance (ESG) analysis is integral to Nordea Asset Management's investment process, particularly in their Emerging Stars Equity Strategy. In fact, companies must pass the ESG screening to be considered for investment in Nordea's ESG Stars products, demonstrating the firm's commitment to financing environmental-science initiatives and fostering sustainable growth in emerging markets. Moreover, by integrating ESG concerns into their finance strategy, Nordea Asset Management aims to generate both financial returns and positive societal impact.
