Patricia Ribeiro

While impact investing has evolved to become a mainstay for global investors, more work is required by corporates and governments of emerging markets (EM) if these jurisdictions are to counter environmental and health vulnerabilities, according to American Century senior portfolio manager, Patricia Ribeiro.

Ms Ribeiro said EM arguably have the most to gain from the United Nations’ Agenda for Sustainable Development, which aims to achieve the 17 Sustainable Development Goals (SDG) by 2030. These include ending poverty and reducing inequality, with the UN estimating between $5 trillion to $7 trillion is needed annually over the next nine years if this is to be achieved.

“Many EM countries have more need for investments in infrastructure, technological innovation and educational improvements than developed markets. Living standards in some EM nations are among the lowest in the world, with access to clean water and the ability to treat rare diseases still major issues. These conditions make investing in EM with an SDG focus especially significant.

“EM have also become a means of discovering opportunities that traditional financial analysis may fail to capture, but at the same time, greater collaboration and engagement is critically needed at all levels of the investment chain,” she said.

Ms Ribeiro said achieving the SDGs requires the human, technical and financial resources of EM governments and, importantly, those of listed companies.

“Companies committed to listening and responding to shareholder concerns are often more efficient and more attractive to investors. Their management teams consider evolving risks and recognise long-term opportunities.

“The ability for asset managers to identify such companies that align with both investment and impact criteria is only going to become more profound as time goes on,” she said.

American Century’s EM Sustainable Impact strategy actively contributes to five main impact themes; health care, sustainable living, technological progress, education and environmental protection. Companies invested in directly contribute to the corresponding SDGs.

“ESG – or impact – investing is crucial to the success of the SDGs; however fundamental changes are needed to support a more equitable, healthy and sustainable future.

“The right investment framework can generate financial returns and drive positive societal change. EM companies could benefit from the growth generated by the positive impact the SDGs intend to achieve, and serve as a fundamental driver of growth in corporate revenues and earnings,” Ms Ribeiro said.

American Century distributes more than 40 per cent of its dividends to the Stowers Institute for Medical Research, enabling clients to directly support lifesaving research and contribute to the global fight against gene-based diseases.

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