Let’s be honest. When you hear “ESG,” your mind probably jumps to sleek corporate headquarters in London or New York. To green bonds issued by European banks and tech giants publishing glossy sustainability reports.

But the real story, the messy, complicated, and utterly crucial one, is unfolding elsewhere. It’s happening in the bustling markets of Vietnam, the solar farms in Chile, and the fintech startups in Kenya. This is the story of ESG integration in emerging markets and developing economies (EMDEs). And frankly, it’s where the future of sustainable investing is being written.

Why EMDEs Aren’t Just Playing Catch-Up

It’s easy to frame this as a simple case of the developed world leading and the developing world following. But that’s a flawed picture. EMDEs face a unique set of challenges—and possess some surprising advantages.

Think of it like building a house. Developed economies are trying to retrofit an old, crumbling structure with new, eco-friendly plumbing and wiring. It’s expensive, disruptive, and you’re constantly fighting the original design. Many EMDEs, on the other hand, are building from the ground up. They have the chance to bake ESG principles right into the foundation.

The Compelling Case: More Than Just Good Feelings

So, why should a company in Nigeria or Indonesia bother with ESG? The reasons are becoming brutally practical.

• Access to Capital: Global investors are increasingly mandated to allocate funds sustainably. A strong ESG proposition is no longer a “nice-to-have”; it’s a key that unlocks international investment. It’s the difference between getting a meeting and getting a check.
• Operational Resilience: Climate change isn’t a future threat; it’s a present reality for many EMDEs. Proactive environmental management—like water conservation in drought-prone areas—is a direct line to business continuity.
• License to Operate: In communities where trust in institutions can be fragile, a company’s social license—earned through fair labor practices, community engagement, and good governance—is its most valuable asset. Lose that, and you lose everything.

The Hurdles on the Ground: It’s Not That Simple

Okay, so the “why” is clear. But the “how” is where things get gritty. The path to integrating ESG in developing economies is, well, bumpy.

First, there’s the data dilemma. Or rather, the lack thereof. Reliable, consistent data on carbon emissions, workforce diversity, and supply chain ethics can be scarce. It’s like trying to navigate a city without street signs. You know you need to get somewhere, but the tools are missing.

Then there’s the regulatory mosaic. Frameworks can be inconsistent, or worse, non-existent. A company might operate across three different countries, each with its own nascent—and conflicting—set of green reporting rules. The compliance headache is real.

And let’s not forget the immediate pressure of economic development. When a government is focused on lifting millions out of poverty, long-term environmental goals can, understandably, take a back seat to short-term job creation and GDP growth. It’s a tough balancing act.

A Glimpse at the Landscape: Sectors Leading the Charge

Despite the challenges, progress is palpable. It’s just happening in a different way. You won’t always find a Chief Sustainability Officer, but you will find ESG principles embedded in core operations.

A Blueprint for Action: How to Make it Work

So, what does effective ESG integration look like in this context? It requires a tailored approach, not a copy-paste of Western models.

Here’s a potential roadmap:

1. Start Local, Then Go Global: Address the environmental and social issues that are most material to the local community and economy first. A mining company in the DRC should prioritize community health and safety long before it worries about its corporate carbon footprint for a European investor. This builds credibility.
2. Embrace “Good Enough” Data: Don’t let the perfect be the enemy of the good. Start with the data you can collect, even if it’s imperfect. Use local proxies and estimates. The goal is to show a commitment to improvement, not to have a flawless Year 1 report.
3. Collaborate, Don’t Dictate: The most successful initiatives involve partnerships—between companies, local governments, NGOs, and international development agencies. This shares the burden and pools knowledge.

The Road Ahead: A Different Kind of Leadership

The narrative is shifting. EMDEs are not just passive recipients of ESG standards. They are becoming active innovators, creating models that are lean, context-aware, and deeply integrated with development goals.

They are showing that sustainability isn’t a luxury for the rich. It’s a fundamental component of resilient, long-term growth. The journey is uneven, sure. It’s filled with false starts and recalibrations. But the direction of travel is clear.

In the end, the true test of the global ESG movement won’t be its success in Stockholm or San Francisco. It will be its ability to take root and flourish in Nairobi, Hanoi, and Lima. And that’s a story worth watching.