Chapter 3: Drivers and challenges of sustainable and responsible investment in developing economies
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The interest in Sustainable Responsible Investment (SRI) has been soaring over the last two decades, as evidenced by a substantial increase in the assets under management (AUM), which is close to 40% of the total across the globe. This may be attributed to the series of financial crises, natural catastrophes, social issues and the launching of the Sustainable Development Goals. On the demand side, investors are becoming more sophisticated and are now seeking assets that safeguard their ethical and moral convictions while also achieving societal benefit. Generally, the expectation is that SRI will not only facilitate the transition to a greener and more resilient economy grounded in social justice and inclusivity, but also enhance the financial benefits of individuals and businesses by making investments and businesses more sustainable. However, whereas developed economies have made significant strides in the SRI space, the same cannot be said for developing economies. Given the burgeoning interest in this subject, this chapter seeks to examine the key drivers propelling the growth of SRI in developing countries. In addition, the chapter discusses some challenges that confront SRI growth and proffers some recommendations for policy attention aimed at promoting SRI.

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