Emerging-market stocks combining long-term growth and sustainability

Sustainable investing is a long-term, multi-stakeholder approach to value creation. It has a clear focus on positive, real-world, social and environmental outcomes. These are delivered and quantified in an effective, accurate and repeatable way. Our strategy is one of the few available to give investors pure emerging-market equity exposure with a focus on sustainability.

We invest in a diversified portfolio of companies in developing or emerging nations, focusing on firms with good or improving sustainability criteria as defined by our proprietary environmental and social governance (ESG) rating methodology.

One of the main investment opportunities we have identified is closing the funding gap. The Organisation for Economic Co-operation and Development (OECD) estimates that the gulf between the annual financing requirement for emerging markets to meet the United Nations’ sustainable-investment goals by 2030, and current investment trends, is $3.9trn. Firms we invest in that represent attractive sustainable-investment opportunities and contribute to closing the funding gap include the following.

Powering smartphones and AI

TSMC (NYSE: TSM) is the world’s largest semiconductor foundry. Through sustainable innovation in product development, the company benefits from higher efficiency and lower water and power consumption, preserving scarce resources.

The company supplies semiconductor chips for use in smartphones, artificial-intelligence (AI) servers, and cars. Major customers include Apple, Nvidia, and Qualcomm. TSMC has foundries in Taiwan, China and the US, with plans to open additional ones in Europe and the US. Our strategy is overweight the stock, reflecting our optimism over the long-term growth in global demand for semiconductors used in AI, consumer products and vehicles.

Hon Hai (NYSE: HNHPF) is the world’s largest contract electronics manufacturing company. Hon Hai aims to red