Investing in Climate Accountability – A Systems Lens on Carbon Commitments in Emerging Markets

Context: Climate Commitments Meet Alternative Investment

Over the past few weeks, I’ve been immersed in a consulting project focused on designing a roadmap for a leading alternative asset management firm to establish carbon emission commitments and long-term targets. The goal of the project is to recommend a set of milestones for the next one, five, and ten years—aligned with both the firm’s investment strategy and the global momentum toward climate accountability.

This firm operates predominantly in Latin America and specializes in private market investments, including infrastructure, real estate, private equity, and credit. These asset classes—often long-term and capital intensive—are uniquely positioned to influence the trajectory of the carbon transition, particularly in the Global South. Unlike liquid public equity markets, where rapid divestment or reallocations are possible, private markets involve longer holding periods and deeper operational involvement. That also means there’s more leverage—both in risk and opportunity—to shape outcomes on sustainability.

Within this context, the project touches on several layers of complexity. It’s not just about recommending a “net zero” date or publishing a carbon disclosure. It’s about understanding where the firm sits within broader financial systems, development realities, and institutional dynamics. The work requires a combination of system-level thinking and grounded, local knowledge—balancing ambition with practicality.

Complexity in Emerging Market Climate Action

A core insight emerging from this project is the difficulty of applying global climate frameworks in a one-size-fits-all fashion—especially in emerging markets. While international climate commitments like the Paris Agreement provide a useful north star, firms operating in regions like Latin America face very different realities compared to their peers in North America or Europe.

For example, many of the portfolio companies in this firm’s ecosystem operate in hard-to-abate sectors: energy, transport, logistics, and industrial services. These sectors are both carbon-intensive and often underserved by public investment in decarbonization technologies. As a result, setting carbon targets must take into account not only emissions intensity but also economic interdependence, infrastructure constraints, and sectoral readiness. Achieving a credible emissions reduction trajectory in these sectors demands more than internal policy—it requires more complex strategic engagement with suppliers, local governments, and value chains.

Furthermore, the data gap is a big barrier. Climate-related disclosures are growing more standardized in developed markets, but many Latin American portfolio companies—especially those that are privately held—still lack the tools and incentives to track emissions at a granular level. That means any carbon target must also include a plan to build internal measurement capacity and promote data collection protocols across the investment chain.

The challenge doesn’t stop at technical feasibility. The current geopolitical climate adds another layer of unpredictability. While global initiatives like the Net Zero Asset Managers Initiative (NZAM), the Science Based Targets initiative (SBTi), and the Task Force on Climate-related Financial Disclosures (TCFD) have become popular guideposts for firms seeking credibility, recent developments have shown how fragile consensus can be. Some governments have slowed or reversed their climate commitments, and financial regulators in certain jurisdictions are pushing back on ESG mandates. This uncertainty increases the pressure on firms to act voluntarily, but it also raises questions about how to future-proof climate strategies amid shifting global norms.

Mapping Peers, Frameworks, and the Road Ahead

As part of our research process, we’ve conducted a detailed benchmarking exercise, analyzing how major alternative asset managers—many of whom operate globally—are addressing carbon emissions and climate-related risk. This has included reviewing public disclosures, sustainability reports, investor briefings, and voluntary framework commitments. The goal is to understand where the industry is heading, how quickly, and with what level of rigor.

What we’ve seen is a diverse and still-developing landscape. Some firms have made bold pledges, such as net-zero portfolios by 2040 or comprehensive emissions screening tools for new investments. Others have taken a more conservative approach, opting to prioritize data collection and ESG integration without firm targets. Across the board, most firms are still figuring out how to tackle Scope 3 emissions, which represent the most indirect but significant portion of their footprint.

Another key insight has been the shift from pure divestment to active engagement. In earlier phases of ESG investment, many firms focused on avoiding “bad” assets—those with high emissions or exposure to transition risks. Now, however, there is growing recognition that long-term impact requires engaging with portfolio companies, helping them improve, and ensuring that capital is used as a tool for transformation—not just risk avoidance.

At the same time, we’ve been evaluating global frameworks like the Paris Agreement, the Glasgow Financial Alliance for Net Zero (GFANZ), and evolving taxonomies in regions like the EU and ASEAN. These frameworks offer clarity and structure, but they are not always tailored to the realities of mid-sized firms or emerging markets. For instance, while SBTi offers detailed pathways for emissions reduction, some of its methodologies are difficult to apply to hybrid portfolios with diverse sectoral exposures.

Lessons Learned: From Targets to Transformation

As we move toward formulating our final recommendations, I’ve been reflecting on what climate accountability really means in this context. It’s not just a question of publishing a net-zero goal. It’s about setting up an internal governance system that aligns with investment priorities, allocating resources toward climate risk management, and developing the institutional muscle to measure progress over time.

One of the key takeaways from this experience is the importance of designing with pragmatism. While ambitious climate goals are important, credibility matters just as much. It’s better to start with what can be measured and managed, and then build out from there. In this sense, the project is as much about change management as it is about climate strategy. It requires getting internal stakeholders on board, setting up the right incentives, and creating feedback loops that make sustainability part of how decisions get made.

It’s also become clear to me that finance has an outsized role in driving systemic change. While investment firms may not produce emissions directly, they shape where capital flows, which business models succeed, and how sectors evolve. Their ability to influence supply chains, promote green innovation, and scale sustainable infrastructure gives them a unique power—and with it, a responsibility. As global investors increasingly demand climate-aligned strategies, firms that fail to adapt will be left behind, both reputationally and financially.

For firms in emerging markets, this transition presents challenges—but also an opportunity to lead. By designing strategies that are grounded in regional realities and aligned with global standards, they can define a new model of climate leadership that bridges the gap between aspiration and action.

Conclusion

This project has deepened my understanding of the intricate relationship between climate strategy and institutional identity. There is no universal blueprint for success. Each firm must find its own path—guided by its values, resources, risk appetite, and operational context. Our role as advisors is not to dictate that path, but to help illuminate it—offering structure, insights, and realistic ambition.

As we try to finalize our roadmap and prepare for the final presentation, I’m reminded that progress is rarely linear. It requires persistence, patience, and a willingness to rethink assumptions. But even incremental steps—when taken with integrity and purpose—can create meaningful momentum. Contributing to that process, even in a small way, has been both professionally rewarding and personally inspiring.

This project has also taught me several important lessons beyond the technical aspects of sustainable finance. First and foremost, I’ve learned how critical expectation management is when working with real-world clients. Climate strategy is a complex and often sensitive topic, especially for firms navigating competing priorities. Learning to balance what is ideal with what is implementable—while maintaining a clear sense of direction—has been a valuable skill. I’ve also had to sharpen my multitasking ability, juggling research, writing, strategy development, and feedback cycles simultaneously. Consulting projects like this often move fast and evolve as new information comes in, which requires both flexibility and focus. Perhaps most importantly, I’ve gained a deeper appreciation for collaborative problem-solving. Engaging with complexity in a constructive way—without needing all the answers upfront—has helped me become more comfortable with ambiguity and more confident in framing solutions. These soft skills, though often less visible, are essential for driving change in any professional setting.