What:  Environmental sustainability has been for long left on the side of the road in developing countries, to the profit of growth

Why it is important:  Even if sustainable demand is weak in their market of origin, it might be extremely fruitful for companies from developing countries to embrace the same sustainable approach than in more developed ones.

Companies in emerging markets, from China to the UAE to Brazil, are under mounting pressure from investors, employees, customers, and other stakeholders to become green. Mere pledges are not enough anymore, and most significantly underperform companies in developed markets on influential ESG rankings by various agencies, especially when it comes to environmental sustainability. Reasons for this are multiple: companies from developed markets have started decade earlier to respond to intensified pressure, while on developing market the focus has been on growth rather than environmental impact.

BCG research has found, however, that certain large, high-growth emerging market companies perform well in both financial and environmental KPIs. They also enjoy the following strategic advantages:

-Stronger access to key global markets as the EU and other major trade partners impose tougher regulations on the greenhouse gas footprints of the goods they import. Siam Cement, from Thailand, has secured this way a privileged access to EU market, for instance.

-Greater access to investment and lower capital costs as asset managers and lenders seek to meet their own sustainability commitments and earn the better returns often generated by companies with high ESG ratings. Geely Automobile Holdings raised $400m when it issued a three-year overseas green bond, becoming the first Chinese automaker to do so.

-More opportunities to launch disruptive new business models and change the dynamics in their industries by being in the forefront of the transition from fossil fuels to renewable energy, leading to more innovative proposals for customers and improved attractivity to talents on the way.

The sustainability imperative in Emerging Markets