The material contained on Artisan Canvas represents the views and opinions of the authors. Material written by any particular individual may or may not reflect the views and opinions of Artisan Partners or its associates. The material contained on this site may contain forward-looking statements regarding future events and future performance, as well as management’s current expectations, beliefs, plans, estimates, or projections. Forward-looking statements regarding Artisan Partners Asset Management Inc. and its subsidiaries are subject to a number of risks and uncertainties, including those factors described within “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on February 18, 2020, as such factors may be updated from time to time. The views and opinions expressed in this material are based on market conditions as of the date indicated and are subject to change without notice. While this information is believed to be reliable, there is no guarantee to the accuracy or completeness of any statement in the discussion.
This website does not constitute an offer or recommendation by Artisan Partners of securities or services to, or a solicitation by Artisan Partners of an offer of services or to buy, sell or hold securities. Artisan Partners and the authors noted herein may have financial interests, through investment vehicles or personal investments, in any themes, trends, companies or securities discussed. Materials on this website are informational only and should not be taken as investment recommendation or advice of any kind whatsoever (whether impartial or otherwise). Investing is subject to risks, which include the potential for fluctuations in investment value and loss of principal. Past performance is not indicative of future results.
MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used to create indices or financial products. This report is not approved or produced by MSCI. Frank Russell Company ("Russell") is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell's express written consent. Russell does not promote, sponsor or endorse the content of this communication. The herein referenced S&P index(es) ("Index") is a product of S&P Dow Jones Indices LLC ("S&P DJI") and/or its affiliates and has been licensed for use. Copyright © 2023 S&P Dow Jones Indices LLC, a division of S&P Global, Inc. All rights reserved. Redistribution or reproduction in whole or in part is prohibited without written permission of S&P Dow Jones Indices LLC. S&P® is a registered trademark of S&P Global and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"). None of S&P DJI, Dow Jones, their affiliates or third party licensors make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and none shall have any liability for any errors, omissions, or interruptions of any index or the data included therein. Source ICE Data Indices, LLC, used with permission. ICE Data Indices, LLC permits use of the ICE BofAML indices and related data on an "as is" basis, makes no warranties regarding same, does not guarantee the suitability, quality, accuracy, timeliness and/or completeness of the ICE BofAML indices or any data included in, related to, or derived therefrom, assumes no liability in connection with the use of the foregoing, and does not sponsor, endorse, or recommend Artisan Partners or any of its products or services.
© 2023 Artisan Partners. All rights reserved.
Defining Sustainability in Emerging Markets
To me, sustainability means having the ability to endure. It includes—but goes beyond—environmental, social and governance (ESG) considerations. More broadly, it entails businesses making the right strategic choices that bring continuity to their shareholders, employees, customers and the communities around them. Ultimately, my team invests in emerging markets because as a team of people who were born, educated and have spent large amounts of time in these countries, we want to direct capital to companies that can have a long-term positive impact on emerging markets’ people.
We believe companies manifest and embody sustainability in a variety of ways.
On an individual company basis, sustainability arguably starts at the foundation—with the business model. We seek to avoid companies that are not structured to run sustainably over the long term. On the contrary, our team is committed to allocating capital in fundamentally sustainable ways—which means to businesses that are committed to both profits as well as progress. Profits obtained at the expense of progress are not are not sustainable in the long term.
For long-term investors, the earnings sustainability of companies in which they invest should be among their foremost considerations. We are interested primarily in companies capitalizing on the unique growth opportunities in emerging markets, developing a business model around those opportunities, and translating current growth into sustainable earnings over time. We are not seeking growth solely for its own sake today—rather we are intently focused on identifying growth that can be sustained well into the future.
Another critical quality we look for in the businesses we invest in is a sustainable competitive advantage. Because we know the environment in which these companies operate is constantly evolving, we look for companies that have a sustainable competitive advantage in markets where they compete. Good and bad times will necessarily come and go, and we know that in the face of a crisis, the share prices of most stocks will fall. But we believe sustainable competitive advantages are key to a company’s ability to survive in times of crisis—because while their competitive advantage might be weakened by the crisis, it is less likely to be destroyed altogether if it has staying power.
Environmental, social and governance considerations are natural given our focus on sustainability, and we believe companies engaged in harmful activities are unlikely to successfully drive long-term earnings growth. While these factors certainly play a role in our decision-making process, our approach to sustainability is much broader and deeper than solely ESG.
For us, sustainability is about the future and implies success over time. Therefore, we seek companies we believe capable of achieving sustainability through time—that are showing signs of successfully growing and evolving toward it—rather than just identifying companies that have already been successful. Our focus on the future is a primary reason fundamental research and meeting with people face to face are important to our process. In our experience, third-party sustainability or ESG screens or ratings tend to be backward-looking—whereas investing and progress are about the future. We believe negative ESG screens or exclusion lists, as well as third-party ESG or sustainability scores run the risk of missing out on companies capable of shaping a better future for emerging markets countries and their populations.
Contact the Editorial Staff
Have a question or comment? We welcome your feedback. Comments will not be made public, but will be read by a member of our editorial staff.
Thank you for your question or comment.