Public Fixed Income

Investing Through Climate Risk in Emerging Markets Debt

March 2022 – 3 min read

In this Q&A from the Nordic Fund Selection Journal, Kawtar Ed-Dahmani and Ashwinder Bakhshi discuss where they’re seeing the most material effects from climate change across emerging markets debt today—and what they’re anticipating going forward.

Climate change will likely play an increasingly prominent role in investment processes for years to come. How is the growing attention on carbon emissions, in particular, impacting emerging markets?

Kawtar: Given the focus on achieving ‘net zero’ by 2050, carbon has become a big part of the climate change conversation. Emerging markets have come under scrutiny as many are still reliant on carbon-intensive industries. Along those lines, one big question we’re facing is how to assess the countries that are currently industrializing using coal or other less energy efficient techniques. For instance, questions such as whether a country is doing enough to reduce its carbon intensity, or whether it is building its resilience to major climate change disasters, are important considerations. In our view, a country shouldn’t be penalized for its exposure to climate risks. Rather, we have the responsibility as investors to help ensure these countries have the policies, strategies and financing in place to improve their resilience.

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Ashwinder Singh Bakhshi

Managing Director, Emerging Market Corporate Debt

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