Bridging Global Frameworks and Local Realities: A Reflection on Sustainable Investing

The past few months in the SIRI Practicum have become one of the most conceptually rich investigations I have undertaken. It pushed me deeper than expected into the complexities of sustainable investing in fragile and emerging markets. What began as a straightforward assignment on P-RECs in sub-Saharan Africa soon shifted into an exploration of how development challenges and institutional incentives collide at every step. I entered the project assuming that the bottleneck was simple. I believed it was either low awareness of P-RECs or the absence of proven business models. Once I started reviewing reports and regulatory frameworks, it became clear that this was only the surface. I began digging into sector analyses and country studies to understand how each actor fit into the broader landscape. Eventually, the volume of fragmented information required structure, so I built a Miro dashboard to map institutions, relationships, and bottlenecks. Only then did the picture begin to make sense, allowing me to have clearer and more confident discussions with the stakeholders I had identified.

These conversations helped me interpret the insights from Edmans, Gosling, and Jenter¹ with more clarity. Their survey shows that most asset managers still treat environmental and social performance as secondary to core financial drivers. This matched what I observed across stakeholder discussions. New sustainable finance tools often sit at the intersection of institutional capacity and regulatory clarity, and they are influenced by broader development priorities. The gap between global sustainable investing norms and local realities appeared repeatedly. Many organizations were interested in decentralized renewables but operated within systems where mandates overlap or processes move slowly. Incentives were not always aligned. Investors may appreciate the societal value of mechanisms like P-RECs, but without predictable rules and government support they hesitate. This hesitation then makes it harder for public institutions to see these tools as credible investment pathways.

My understanding of constraints deepened when I compared the article’s findings with what I observed. Edmans and his coauthors note that 71 percent of portfolio managers work under constraints that shape their decisions¹. I saw a similar pattern in emerging markets, although driven by different factors. Various actors hold partial authority with overlapping responsibilities. Many also have differing priorities. No single body has full ownership of new mechanisms or the ability to champion them alone. This results in mixed signals, reduced confidence, and slower progress for anything outside traditional development pathways. These dynamics helped me understand why global investors who care about sustainability still hesitate and why any innovative climate finance tool must navigate a far more layered institutional landscape than standard renewable projects.

Through this work I realized that introducing a new instrument is about more than financial design. It depends equally on timing and framing. The tool must align with local development narratives to gain traction. Stakeholders often pointed out that visibility and community benefit matter as much as technical impact. Ease of implementation is equally important. This helped me appreciate that sustainable finance must be communicated in ways that resonate with local priorities and capacities rather than global expectations alone. The McKinsey article² strengthened this understanding. It argues that companies must address their externalities to maintain their social license. In emerging markets, this idea became tangible. Electricity access is not only an infrastructure service. It builds trust, supports livelihoods, and shapes how communities perceive development. Mechanisms that link renewable energy deployment to broader social outcomes embody this principle well. Even so, they require clarity around ownership, governance, and long-term value. This reinforced my view that sustainable investing succeeds only when built on institutional trust and clear alignment among all actors involved.

Finally, this experience tied together my past consulting work with my current interests. My earlier work taught me how policy clarity and incentives influence implementation. This project revealed how those dynamics unfold in real time in emerging contexts. Both research articles reinforced that sustainable investing works only when grounded in realistic assessments of institutions and incentives. It must also consider the wider context in which tools are deployed. This practicum pushed me to think deeply about the gap between global frameworks and local realities and strengthened my confidence in working at the intersection of development, climate finance, and policy.

References

¹ Edmans, A., Gosling, T., & Jenter, D. Sustainable Investing: Evidence From the Field

² Pérez, L., Hunt, V., Samandari, H., Nuttall, R., & Biniek, K. Does ESG really matter and why? McKinsey Quarterly, 2022