KPMG Study: The Evolution of ESG Strategies in Emerging Markets

Over the past five years, sustainability strategies among infrastructure and energy companies in emerging markets have undergone significant transformation. A recent study conducted in collaboration with the International Finance Corporation (IFC) and KPMG examined 104 companies, using publicly available reports, corporate disclosures, and databases such as S&P Capital IQ and LSEG Data & Analytics, across six sectors:

• Energy, Technology,

• Media & Telecom (TMT),

• Transport,

• Mining,

• Water & Waste, and

• Cross-Sector Operations

Key Findings

1. Growth in Sustainable Finance Adoption

• 51% of companies studied utilize sustainable finance instruments.

• 53% of companies use green bonds, while 30% employ sustainability-linked bonds and 25% rely on sustainability-linked loans.

• 25% of companies engage with development finance institutions (DFIs) and multilateral development banks (MDBs) such as IFC, EBRD, and ADB.

• Water & Waste (75%) and Energy (74%) sectors lead in sustainable finance, whereas Transport (16%) lags behind.

2. Increased Gender Equality Disclosures

• Gender-related disclosures are becoming standard practice, with mining and energy sectors leading in transparency.

• Despite these improvements, many companies do not publicly set gender diversity targets.

• TMT, transport, and water & waste sectors present opportunities for enhanced gender and social inclusivity reporting.

• There is a growing need to expand diversity considerations beyond gender, including disability inclusion and underrepresented communities.

3. Decarbonization Commitments & Nature-Based Solutions

• 38% of energy sector companies have set comprehensive Scope 1, 2, and 3 emissions targets.

• 42% of transport companies commit to carbon-neutral or net-zero goals, despite lower Scope 3 coverage.

• Only 13% of water & waste sector companies report comprehensive carbon emissions data.

• 44% of companies do not disclose Scope 3 emissions, indicating a critical gap in supply chain decarbonization efforts.

4. Increased Focus on Biodiversity & Nature-Based Solutions

• Companies are integrating biodiversity conservation, restoration, and sustainable land management into their operations.

• Adoption of nature-related disclosure standards remains slow, with only 10 out of 104 companies committed to the Taskforce on Nature-related Financial Disclosures (TNFD) framework.

• Nature-based solutions are increasingly being leveraged as part of climate resilience and energy transition strategies.

5. Evolving Community Benefit-Sharing Initiatives

• 84% of companies in the energy and infrastructure sectors disclose education and skills development programs with measurable impact.

• Other initiatives include:

  • Humanitarian support & environmental protection (48%)

  • Health-related projects (44%)

  • Community climate resilience initiatives (8%)

• Companies operating in Latin America and Africa emphasize cultural heritage preservation, infrastructure development, and improved education and healthcare.

ESG Emerging Markets: Challenges & Opportunities

• Increased Climate Finance: The recent COP29 agreement aims to triple climate finance for developing nations from $100 billion annually to $300 billion by 2035.

• Support from Multilateral Banks: MDBs have pledged to provide $120 billion annually by 2030 to support low- and middle-income nations in climate action.

• Supply Chain Decarbonization: Companies face challenges in addressing Scope 3 emissions, as identified in the KPMG 2024 CEO Outlook where 30% of CEOs cited supply chain complexity as a barrier to climate goals.

• Biodiversity Commitments: Despite a rise in biodiversity reporting, progress has slowed, signaling a need for technical support and standardization.

• Gender & Social Inclusion: Greater transparency and sector-wide adoption of gender diversity targets are required, particularly in TMT, transport, and water & waste sectors.

Access the Full KPMG Study

For a comprehensive analysis of sustainability strategies in emerging markets, read the full KPMG report. Explore key trends, challenges, and solutions shaping ESG in emerging markets by visiting the official KPMG insights page: Access the Study.

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