ESG has always been an important component of the RBC Emerging Markets Equity team’s investment philosophy and process, and we have continuously sought to expand our knowledge and initiatives in this area.
When we look back to our first ESG report in 2016, one of our key motivations at the time was to raise awareness of the importance of ESG within the investment community. At that time ESG investing was a small but steadily-growing niche, and the dialogue was largely centred on the “why” and the “how”.
In 2021, however, the industry has witnessed a large increase in the number of ESG-related funds as a result of growing demand from investors and more regulation. The incorporation of ESG factors into an investment process is now widely accepted as the norm, and the focus has shifted from purely avoiding harm to promoting and effecting positive change.
The COVID-19 pandemic, coupled with the extreme weather events witnessed during 2021, have further heightened awareness of environmental issues. The combination of geography, higher carbon emissions and the ability to deal with unexpected natural events are key reasons why we believe climate change will have significant economic and political ramifications for emerging markets.
Thus this year we expanded our research and engagement across a broad range of environmental topics, looking at both the risks and opportunities. We delved deeper into our Green Infrastructure theme and invested in a number of companies that are part of the decarbonisation solution. We have also analysed the impending risk of water shortages and how this may affect various industries.
We have consistently found that companies that invest in their employees and create a progressive and transparent culture tend to be rewarded with strong and sustainable long-term returns. This year we broadened our research in this area by developing a scorecard which is used to analyse our portfolio companies, and as a starting point for further engagement on specific topics. Our key findings are highlighted in this report.
Engaging with companies on ESG-related topics continues to be a critical part of our investment process and this report features some notable case studies and engagement examples from 2021.
We hope that you enjoy these insights into our ESG activities and achievements, and we welcome any feedback on how we can improve our future efforts.
For the full RBC Emerging Markets ESG report, please contact: RBCGAM-USMarketingTeam@rbc.com.