The Importance of SDG Investing in Emerging Markets

By Patricia Ribeiro - June 2019

Key Takeaways

  • Investors increasingly seek investment solutions that address global concerns and help provide financial security. Including the United Nations Sustainable Development Goals (U.N. SDGs) in investment decision-making is one way toward attaining both aims.1
  • We think impact investing using the SDG framework is especially crucial in emerging markets (EM). EM countries need greater investment in infrastructure, technological innovation and education than more developed markets. Living standards are among the lowest in the world and socioeconomic inequalities, including gender and income, can be significant. With some of the world’s most fragile ecosystems, EM countries are also more vulnerable to environmental damage as well as pandemics and rare regional diseases.
  • American Century’s approach to impact investing in emerging markets offers a distinct proposition: To invest in accelerating growth companies whose businesses seek to help address some of the world’s most pressing concerns in countries that may need the most help. We believe providing investment solutions geared toward the SDGs is a natural extension of the impact our firm creates through our unique impact business model.
  • We believe investors can achieve positive social and environmental impact by investing in EM companies that contribute to one or more of the U.N. SDGs. We think this impact can be accomplished without compromising investment returns or reducing environmental, social and governance (ESG)-related risk mitigation.

1 Developed by a global team of industry and government leaders and adopted by all 193 U.N. member states, the SDGs include 17 goals and 169 attendant targets aimed at solving some of the world’s most pressing problems by 2030. The goals include eradicating poverty, protecting environmental resources, and achieving gender and income equality.

The Importance of SDG Investing in Emerging Markets

Market Perspective | June 2019

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      When portfolio managers incorporate Environmental, Social and Governance (ESG) factors into an investment strategy, they consider those issues in conjunction with traditional financial analysis. When selecting investments, portfolio managers incorporate ESG factors into the portfolio's existing asset class, time horizon, and objectives. Therefore, ESG factors may limit the investment opportunities available, and the portfolio may perform differently than those that do not incorporate ESG factors. Portfolio managers have ultimate discretion in how ESG issues may impact a portfolio's holdings, and depending on their analysis, investment decisions may not be affected by ESG factors.

      Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

      The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.