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WPF and Ninety One: Transition in Emerging Markets

Ninety One and Wiltshire Pension Fund logo, emerging markets on green backgorund with images of forests

We were thrilled to receive an invitation from Ninety One to visit their offices in London to discuss our joint commitment to achieving net zero by 2050, and the pivotal role of emerging markets.

It is the Fund's firm belief that strong risk adjusted returns can be achieved alongside delivering positive change. Divestment does not lead to real world decarbonisation, by remaining invested we have the opportunity to engage with companies and help them transition, driving change long term. 

Annika Brouwer (Sustainability Specialist, Ninety One) led the discussion with Grant Webster (Co-Head of Emerging Market Sovereign & FX, Ninety One) and Jennifer Devine (Head of Wiltshire Pension Fund). 

The collaboration between WPF and Ninety One on the transition in emerging markets is crucial in line with our shared commitment to achieving net zero.

Net Zero for some is Net Zero for no-one.

When it comes to our approach, as a Fund we acknowledge that in the short term remaining invested may lead to higher emissions in our existing portfolios, but rather than taking the easy route and divesting, our long term investment horizon allows us to drive real world change. Working with Ninety One, we have come up with targets and objectives for the portfolio that will mean that we can achieve net zero over the long term.   

Emerging markets provides differentiated returns and it helps to diversify the risk, whilst also providing opportuntiy to tie in with our long term investment horizon and help finance the transition. 

During the discussion Grant emphasises the necessity of staying invested, recognising that disinvestment doesn't equate to real-world decarbonisation. Instead, we need to actively engage, acknowledging that emerging markets, despite being significant emitters, play a vital role in the transition. Going on to highlight that being able to invest across debt and equity means we can invest in both companies and in governments, providing opportunity to influence change in both.

At WPF, good engagement has to be two things:

  • it's got to be focused
  • and convincing

By focussing on the top emitters in your portfolio, you can cover a large amount of the emissions , as detailed in our 2023 Climate Report (PDF) [2MB] (opens new window)  where around 40% of the Fund's entire listed equity emissions are held by 10 companies.

We also want our managers to try their best, we want them to engage and see results, but ultimately we want them to have the strength of their convictions to divest if they're not seeing any progress. Where our engagement highlights no improvement to reaching our net-zero targets, we will hold our managers accountable for the investment rationales and take proactive measures to ensure the highest standards of social and environmental impact can be achieved. Our final stage of escalation, where we feel we have exhausted all avenues, will be to request that the company is divested from our portfolio. 

In conclusion, emerging markets are not merely part of the problem; they are an integral part of the solution. Disinvestment doesn't solve the emission issue; instead, engagement and continued investment in the transition are imperative towards a sustainable future.

Safeguard the assets, strong risk adjusted returns, responsible ownership and stewardship, positive impact, transparency and information sharing

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