Actively placing the considerations of emerging markets at the forefront of discussions.

The transition towards a low-carbon economy is a global challenge, requiring global solutions. There is broad recognition of the need to manage this transition in a just and inclusive way, yet there is limited emphasis in mainstream discussions on exactly how difficult this process may be with regard to emerging markets.

Currently, global progress towards limiting warming in line with 1.5°C has been insufficient – and this is even more so the case within emerging markets. There are good reasons why this is the case, as emerging markets face significant challenges – higher dependence on fossil fuels combined with increased economic growth, insufficient reasons to finance the transition through clean energy and other climate solutions, as well as other unfinanced basic development needs. If, as a society, we are going to meet global climate goals and ultimately reach net zero, it is critical to ensure emerging markets are able to make this transition towards a low-carbon economy, alongside more mature or established markets. It is equally critical to ensure that this transition is managed in a just and inclusive way, leaving no one behind.

Prudential firmly believes in the need for a just and inclusive transition, in a way that actively places the considerations of emerging markets at the forefront of discussions. We are focusing our support on accelerating the clean energy transition through engagement and opportunities for financing, rather than divestment. We recognise our investments may initially be more carbon-intensive than our peers in developed markets, which may mean our pace of decarbonisation differs. Despite this, we have committed to being a net zero asset owner by 2050 and are confident we can reach this target and support a just and inclusive transition in the process.

The purpose of this paper is threefold:

1. To define the case for a just and inclusive transition, and its place in meeting the Paris Agreement;
2. Highlight the importance that Prudential places on ensuring the transition to a low-carbon economy is a just and inclusive one; and
3. Explore case studies and further actions required, from Prudential and the wider market.

As a significant investor and asset owner with long-term investment horizons and liabilities, Prudential is in a position to support the just transition within emerging markets. This paper sets forward our position largely from the asset owner perspective, acknowledging that the execution must be managed in partnership with our asset managers. We recognise that this is a process of continuous improvement. We expect both our position and execution approach to evolve whilst maintaining our objective to influence real-world impact in a just and inclusive way.

Read the Prudential plc just and inclusive transition white paper.

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