Morgan Stanley Investment Management has released its Emerging Markets Equity Annual Stewardship Report 2025, covering activities from January 2024 through June 2025. The report highlights the firm’s continued commitment to active proxy voting and engagement with portfolio company management teams in emerging markets.
The team concentrated on key sustainability issues, including governance, decarbonization efforts, working conditions, and gender diversity. Engagements related to governance saw a significant increase, focusing on board independence and executive compensation. Environmental discussions were centered around strategies for decarbonization and emissions reduction. Social initiatives addressed working conditions and diversity within companies. The firm also emphasized the importance of improved corporate disclosures and sharing best practices among its investments.
"Our focus remained on material issues, such as governance, decarbonization and working conditions and gender diversity. Governance engagements increased significantly, with a focus on board independence and executive compensation. Environmental discussions centered on decarbonization and emissions reduction strategies. Social engagements addressed decent work conditions and diversity. We also emphasized strengthening corporate disclosures and sharing best practices."
The Emerging Markets Equity team’s investment approach is informed by proprietary research indicating that both country-level dynamics and stock-specific factors play roles in driving risks and returns in these markets.
Morgan Stanley Investment Management cautions that ESG strategies can result in investment performance diverging from other approaches or market benchmarks depending on prevailing market trends. There is no assurance that these strategies will lead to better performance or that any portfolio will achieve its investment objectives. Risks include potential losses due to market volatility influenced by economic events or company-specific developments; investments in foreign or frontier emerging markets carry additional risks such as currency fluctuations, political instability, liquidity challenges, industry concentration (notably banking), as well as heightened volatility for small- or mid-cap stocks.
Other risks outlined include exposure to derivative instruments—which may increase losses—and challenges associated with illiquid securities or nondiversified portfolios that are more sensitive to changes affecting single issuers.
"The views and opinions and/or analysis expressed are those of the author or the investment team as of the date of preparation of this material and are subject to change at any time without notice due to market or economic conditions and may not necessarily come to pass," according to Morgan Stanley Investment Management.
The report was prepared using publicly available information along with internally developed data; however, Morgan Stanley notes it has not independently verified all third-party sources cited.
"This material is a general communication, which is not impartial and all information provided has been prepared solely for informational and educational purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy," states Morgan Stanley Investment Management.
Investors are advised to consult offering documents carefully before making decisions regarding these strategies.