£400 billion investor group releases draft EM just transition guiding principles

The Emerging Markets Just Transition Investor Initiative has published draft guiding principles to inform members’ investment decision making, approaches and future allocations to emerging markets.

The initiative began in May 2022 when 12 UK pension pools and funds with assets of £400 billion and representing 18 million members, committed to supporting the transition to a lower carbon economy in emerging markets.

While the group explores how to have greater impact in delivering real world change that support climate transition in emerging markets while supporting economic growth, it has shared these draft principles for consultation ahead of a list of principles being finalised in 2023.

The principles address three key challenges:

• The lack of allowance made for a differentiated pace of change between developed markets and EMs
• That existing investor frameworks for the global climate transition do not cover a large part of the EM sovereign and corporate universe
• The unequivocal role for more developed market funding from both public and private finance

Members, which include The Church of England, Border to Coast, Brunel Pension Partnership and Railpen, have been asked to provide feedback so that a final version of principles may be published by the end of Q1 2023.

These will inform the members’ understanding of the transition in EMs and how investment approaches should be framed.

One stated ambition is for investors’ net zero frameworks to be aligned with the interests of a just transition in emerging markets.

The EMJTII will also seek to work with other pension funds committed to investing in EM transition finance.