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AB: ESG Opportunities: Emerging Markets and Biodiversity
AB: ESG Opportunities: Emerging Markets and Biodiversity
Published 01-15-24
Submitted by AllianceBernstein
Erin Bigley, CFA| Chief Responsibility Officer
Transcript
There are a lot of opportunities we're going to be exploring in the responsible investing space in 2024, from carbon markets, which are developing rapidly, to blended finance, which is expanding, to the changing nature of the labor markets and how diversity, equity and inclusion can be a competitive advantage for companies.
One of the other areas of focus within responsible investing is emerging markets, which are really starting to take center stage. And in the emerging markets, what we see is the true intersection of environmental and social factors. We see that in things like just transition, where emerging countries need to think about transitioning away from fossil fuels but doing so in a way that does not disrupt the social fabric of their economies.
We also see that in the intersection of climate change and modern slavery, where many emerging markets are faced with physical climate change risks; they're seeing increased incidence of typhoons, or droughts, that can lead to population disruption and can make populations more vulnerable to modern slavery and human trafficking.
Blended finance is one way to bring capital to emerging markets, much needed capital for biodiversity or other environmental challenges. Blended finance brings together developed-market governments, emerging-market governments and private investors. The developed-market government provides a guarantee that lowers the cost of finance to the emerging-market investor, and it also expands the attractiveness to private investors because the credit risk is lowered.
There are other areas of responsible investing that are equally as interesting. For example, biodiversity has been a big topic of research for our team over the past year, and in 2024, we’re going to be diving into a specific area of biodiversity in terms of water. Water issues will be at the forefront of investors’ minds over the next several years as communities, companies, countries need to deal with the risks around water scarcity, around water pollution and sustainable water management.
Biodiversity and water scarcity are concerns that we need to think about globally, both within the developed markets, as we're seeing here in the United States, as well as across the emerging markets.
The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams. Views are subject to revision over time.
Learn more about AB’s approach to responsibility here.
AllianceBernstein
AllianceBernstein
AllianceBernstein (AB) is a leading global investment management firm that offers high-quality research and diversified investment services to institutional investors, individuals, and private wealth clients in major world markets. We believe corporate responsibility, responsible investing and stewardship are intertwined. To be effective stewards of our clients’ assets, we strive to invest responsibly—assessing, engaging on and integrating material issues, including environmental, social and governance (ESG), and climate change considerations in most of our actively managed strategies. We also believe that strive to hold ourselves as a firm to similar practices that we ask of issues. Our stewardship practices, investment strategy and decision-making are guided by our purpose, mission and values.
Our purpose—pursue insight that unlocks opportunity—inspires our firm to act responsibly. While opportunity means something different to each of our stakeholders; it always means considering the unique goals of each stakeholder. AB’s mission is to help our clients define and achieve their investment goals, explicitly stating what we do to unlock opportunity for our clients. We became a signatory to the Principles for Responsible Investment (PRI) in 2011. This began our journey to formalize our commitment to identify responsible ways to unlock opportunities for our clients through integrating material ESG factors throughout most of our actively managed equity and fixed-income client accounts, funds and strategies. AB also engages issuers where it believes the engagement is in the best financial interest of its clients.
Because we are an active manager, our differentiated insights drive our ability to deliver alpha and design innovative investment solutions. ESG and climate issues are important elements in forming insights and in presenting potential risks and opportunities that can have an effect on the performance of the companies and issuers that we invest in and the portfolios that we build.
Our values provide a framework for the behaviors and actions that deliver on our purpose and mission. Values align our actions. Each value emerges from the firm’s collective character—yet is also aspirational.
- Invest in One Another means that we have a strong organizational culture where diversity is celebrated and mentorship is critical to our success. When we invest in one another, we empower our employees to reach their potential, so that they can help our clients realize theirs. This enables us to partner with clients to design and deliver improved investment outcomes.
- Strive for Distinctive Knowledge means that we collaboratively identify creative solutions to clients’ economic, ESG and climate- related investment challenges through our expertise in a wide range of investment disciplines, close collaboration among our investment experts and creative solutions.
- Speak with Courage and Conviction informs how we engage our AB colleagues and issuers. We seek to learn from other parts of our business to strengthen our own views. And we engage issuers for insight and action by sharing ideas and best practices.
- Act with Integrity—Always is the bedrock of our relationships and has specific meaning for our business. Unlike many other asset managers, we’re singularly focused on providing asset management and research to our clients. We don’t engage in activities that could be distracting, or create conflicts—such as investment banking, insurance writing, commercial banking or proprietary trading for our own account. We are unconflicted and fully accountable.
As of September 30, 2023, AB had $669B in assets under management, $458B of which were ESG-integrated. Additional information about AB may be found on our website, www.alliancebernstein.com.
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