Elena Vydrine
Senior Investment Specialist – Public Markets
Emerging markets and developing economies (EMDEs) play a crucial role in ensuring the global transition happens at speed and scale. However, the social aspects of the transition in these markets are becoming more material – creating a disparity between those that stand to benefit and those at risk of being left behind. This Insight explores how investors can help scale climate investment in EMDEs while ensuring broad-based benefits.
This piece was co-authored with Jheel Baldi, Corporate Programme Manager and Meng-Lian Li, Policy Programme Manager.
The global net zero transition will not be achieved without meaningful progress in EMDEs. Crucially, the transition must also be just, effectively mitigating associated social and economic impacts.
Where social and economic impacts are overlooked, investors may face operational, regulatory and systemic risks that undermine project delivery and long-term value.
Ahead of the IIGCC Summit 2026, which kicks off London Climate Action Week on Monday 22 June, this Insight sets out:
- why a just transition is becoming central to investment strategy;
- how investors are already managing emerging risks;
- what is needed to scale investment and implementation with just transition considerations.
These themes will be explored further at the Summit in a members-only workshop for portfolio managers, stewardship teams, and data providers. The session will bring together investors with experience integrating just transition considerations through NZIF, stewardship and policy advocacy to share practical insights and emerging approaches.
Why the transition hinges on EMDEs
EMDEs are expected to drive most of the world’s future economic growth as well as emissions growth. According to the UK Government, EMDEs represent over 40% of the global economy. As a result, the pace and credibility of the global net zero transition will be determined by how effectively capital can be deployed into these markets.
More specifically, EMDEs require nearly USD 4 trillion in annual climate finance between now and 2030 to meet climate goals. Mobilising private capital at the scale required remains a major challenge, particularly as public and development finance alone will be insufficient to meet investment needs.
At the same time, scaling investment into EMDEs remains complex. Beyond financial and policy considerations, transition and physical climate risks will reshape labour markets, industries, supply chains and communities, often unevenly across regions.
If these impacts are not adequately managed, they can create risks for investors, from project delays and social opposition to broader disruption. In this context, just transition considerations are central to enabling investable and durable transition pathways, while helping ensure capital remains invested in these markets.
From commitments to real-world challenges
Investors increasingly recognise the importance of a just transition. The challenge is no longer whether it matters, but how to embed it into investment decision-making, stewardship and capital allocation in practice.
The just transition challenge is not exclusive to EMDEs, but it plays out differently. In developed markets, investors are often focused on regional industrial decline and the social consequences of decarbonisation. In EMDEs, these issues intersect more directly with development priorities such as energy access, affordability, fiscal dependence, economic resilience and the capacity to absorb transition costs.
In practice, this creates tension. Investors recognise the need to increase capital flows into EMDEs, yet concerns remain around policy uncertainty, social instability and project execution risks. Alongside this, portfolio decarbonisation approaches can incentivise investors to withdraw capital from higher-emitting or higher-risk markets, which may undermine the real economy transition where it is most needed.
Investors currently face a gap between ambition and execution when it comes to putting frameworks and principles into practice. Limited access to consistent data, metrics and practical examples make it difficult to embed just transition considerations into day-to-day investment decisions.
Investors also face competing objectives, from delivering emissions reductions to supporting jobs, affordability and community resilience. This introduces complex, location-specific trade-offs across regions, sectors and stakeholder groups.
As a result, the question for investors becomes how to operationalise just transition at scale, particularly in EMDE contexts.
Turning principles into investment practice
IIGCC’s focus in this area is on translating just transition from principle into actionable investment practice, anchored in NZIF.
This means supporting investors to embed just transition considerations across the full investment lifecycle, from strategy, governance frameworks and capital allocation through to stewardship, voting approaches, due diligence and reporting.
It also requires more differentiated approaches in EMDEs, reflecting their diverse development priorities, transition starting points and fair-share pathways.
Alongside this, there is a critical role for more substantial stewardship and policy engagement, both to shape enabling environments and to mobilise capital into EMDEs in ways that preserve long-term value. Corporate engagement is a key mechanism for ensuring that investors develop credible strategies and business models that account for just transition risks.
Building the practical evidence base is equally important, with a need for more robust tools, case studies, metrics and practices that can support consistent implementation across portfolios.
Ultimately, if the transition is not socially deliverable, it is not financially credible. It is core to risk management, investment discipline and long-term portfolio resilience, including in EMDEs.
What the workshop will tackle
This workshop will explore how investors are integrating just transition considerations into EMDE investment strategies, stewardship approaches and capital allocation, and what is needed to scale this further.
Through breakout discussions, participants will examine practical implementation challenges, share emerging approaches and lessons learned, and identify gaps in data, tools and market structures.
The session is designed to produce actionable investor insights across asset owners, asset managers and data providers, helping us address a central question:
How do we scale climate investment in EMDEs through transition pathways that are credible, investable and socially resilient?
Hear from JP Morgan’s Dr. Sarah B Kapnick, IPCC’s Sir Jim Skea and S&P’s Francesco d’Avack at the IIGCC Summit 2026 – as we make sense of climate in an age of rupture and competing priorities, risks and opportunities.