Date: October 30th, 2020

Subject: How to increase ESG Investing in Developing Countries

MLA Citation:

Bai, Qing, et al. “ESG Investing: How to Increase ESG Investing in Developing Countries.” Https://Www.sipa.columbia.edu/Academics/Capstone-Projects/Esg-Investing-How-Increase-Esg-Investing-Developing-Countries, 2018, Columbia University: School of Public and International Affairs.

For this week’s research assessment, I dived into a topic that was very close to heart. As I have had the opportunity to explore social impact through the lens of social entrepreneurship as I attempted to establish a partnership with the UNIDO to send coffee ground-infused fire logs for cooking in rural countries, driving development in developing economies using ESG investing was naturally attractive. To conduct research on this topic, I began to read a few established articles and realized how the growth percentage of the ESG market in developed countries was far greater than in developing markets, or frontier markets, and I needed to get to the reason for this phenomenon. Due to this inquisitiveness, I read and annotated a research study conducted by students as part of a capstone project at Columbia University. Through this research study, which discussed the reasons why individuals are deterred from investing with an ESG lens in foreign markets, which served as a perfect opportunity for me to incorporate my skill of inventiveness and apply it to impact investing as this study may lead me to devise solutions to aid in this transition.

The most important part of this assessment was not only understanding the reasons behind a lack of growth and interest in ESG investments in foreign volatile markets but also the potential that can lead me to devise and execute personal solutions to aid this issue. As the study stated how “the highest ESG risk scores are from developing countries” while a significant “96% of assets in Canada’s responsible investing market were managed under ESG perspectives,” it was clear that investors were wary of providing the necessary demand to supply the development of the necessary infrastructure to execute these transactions  (Bai, et al. 2). The situation itself revolves around the independent investor while the problem is centered around a lack of data. Due to a lack of reliable, long-term studies regarding the efficacy of ESG investments in volatile foreign markets, independent investors tend to mitigate risk by simply investing in trusted ESG accounts. This lack of demand does not provide asset management and investment groups any incentive to develop the necessary groups to perform these tasks nor conduct any research on how to advance this sector of ESG investments. This, then, leads to an undersupply of ESG capital flow into high-risk foreign markets and stalls economic development.

Through this realization, I might have an opportunity to combine my own interests of innovation and growth with my fundamental knowledge of impact investing to mold my Original Work and Final Product in a different manner. By targeting the pain points of the situation, similar to addressing the needs of a consumer when running a company, there might be potential for me to address the points of a lack of research in this field and a vague definition of the terms involved within ESG investing. To address the lack of a universal definition for ESG investing and related terms, I may be able to generate a pamphlet or pen an extensive research report defining these terms and explaining my reasons of defining them a specific way. In addition, to address the lack of knowledge about the efficacy of ESG investments in foreign markets, I may be able to synthesize my knowledge of social impact, customer centricity, and basic finance to construct a simulation to evaluate the efficacy of ESG investments in foreign markets by evaluating the financial return and the social impact created within the target society or economic market. Ultimately, this research has provided me with a steppingstone to an innovative project that can lead me into college and revolutionize the impact investing field.

In conclusion, I am excited at the potential possibilities there are for me to combine my interests in innovation and impact investing to drive change and possibly place a sect that is rarely talked about on the centerstage of sustainable finance.