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2 minutes to read by  RBC Emerging Markets Equity team Oct 29, 2025

This is the third Climate report from our RBC Emerging Markets Equity team and is designed to supplement our annual ESG report, which we have been publishing as a team since 2016.

Like last year, the aim of this report is to provide stakeholders with additional information on climate-related risks and opportunities of the RBC Emerging Markets Equity Strategy (“the strategy”).

We believe that companies that invest and plan for the future and focus on a range of material ESG factors, including climate change, have more durable business practices and are therefore more likely to achieve resilient, long-term returns while also avoiding the risks.

RBC GAM has developed a number of climate data tools for measuring and monitoring changes in our portfolio’s climate-related risks and opportunities. Using these tools and other inputs, we can provide climate-related metrics for each of the categories below:

  • Carbon intensity: measuring our portfolio’s Scope 1 & 2 carbon intensity relative to the benchmark.

  • Net-zero alignment: this is based on two metrics – the percentage of AUM invested in issuers with net- zero or science-based targets1 and issuers with a temperature alignment below 2oC, based on ITR2.

  • Climate-related engagements: our engagements focus on understanding our companies’ approach to material climate-related risks and opportunities, and monitoring their progress in addressing these.

The strategy currently has a 78% lower weighted average carbon intensity (“WACI”) than the MSCI EM Index (based on WACI sales, Scope 1 and 2 emissions)3. The portfolio’s temperature alignment is 2.1°C, based on MSCI’s Implied Temperature Rise (“ITR”)4.

Whilst we don’t seek a climate-related investment objective, through our analysis5 we expect the strategy will be aligned to net-zero (inclusive of Scope 1 & 2) by 2050, based on the target years of our underlying holdings. For companies in our portfolio where climate change presents a material risk, we expect them to have a short-term carbon emissions reduction target, a net-zero target year, and a net-zero plan.

We will continue to engage with companies in which we are invested, and closely monitor their progress in meeting these expectations.

For our full report, please contact USMarketingTeam@rbc.com.

1 RBC GAM considers issuers’ targets to be ‘Paris-aligned’ (also called ‘science-based’) or ‘net-zero aligned’ if they have been verified by the SBTi as meeting their related target-setting criteria. SBTi provides a publicly available database of companies that have verified science-based and/or net-zero targets and those that have committed to setting an emissions reduction target within 24 months. This metric combines both verified and committed SBTi targets.

2 The Implied Temperature Rise (“ITR”) is a modelled, forward-looking metric by MSCI that indicates what the global average temperature increase would be in 2100 if the global economy had the same carbon performance and emissions reduction targets as that of the issuer or portfolio. This metric considers the carbon emissions of issuers, the expected reduction in emissions due to published emission reduction targets, and the likelihood of achieving established targets. As such, the ITR provides an indication of the alignment of an issuer or portfolio to a particular temperature pathway. Source: ITR Methodology, MSCI® ESG Research, as at September 2021.

3, 4 RBC GAM, MSCI ESG climate change metrics, MSCI®, as at 30 June 2025.

5 Analysis is based on carbon emissions and each holding’s weight and stated net-zero target year.
Disclosure
This material is provided by RBC Global Asset Management (RBC GAM) for informational purposes only and may not be reproduced, distributed or published without the written consent of RBC GAM or its affiliated entities listed herein. This material does not constitute an offer or a solicitation to buy or to sell any security, product or service in any jurisdiction; nor is it intended to provide investment, financial, legal, accounting, tax, or other advice and such information should not be relied or acted upon for providing such advice. This material is not available for distribution to investors in jurisdictions where such distribution would be prohibited.

RBC GAM is the asset management division of Royal Bank of Canada (RBC) which includes RBC Global Asset Management Inc. (RBC GAM Inc.), RBC Global Asset Management (U.S.) Inc. (RBC GAM-US), RBC Global Asset Management (UK) Limited (RBC GAM-UK), and RBC Global Asset Management (Asia) Limited (RBC GAM-Asia), which are separate, but affiliated subsidiaries of RBC.

In Canada, this material is provided by RBC GAM Inc. (including PH&N Institutional), each of which is regulated by each provincial and territorial securities commission with which it is registered. In the United States, this material is provided by RBC GAM-US, a federally registered investment adviser. In Europe this material is provided by RBC GAM-UK, which is authorised and regulated by the UK Financial Conduct Authority. In Asia, this material is provided by RBC GAM-Asia, which is registered with the Securities and Futures Commission (SFC) in Hong Kong.

Additional information about RBC GAM may be found at www.rbcgam.com.

This material has not been reviewed by, and is not registered with any securities or other regulatory authority, and may, where appropriate and permissible, be distributed by the above-listed entities in their respective jurisdictions.

Any investment and economic outlook information contained in this material has been compiled by RBC GAM from various sources. Information obtained from third parties is believed to be reliable, but no representation or warranty, express or implied, is made by RBC GAM, its affiliates or any other person as to its accuracy, completeness or correctness. RBC GAM and its affiliates assume no responsibility for any errors or omissions in such information.

Opinions contained herein reflect the judgment and thought leadership of RBC GAM and are subject to change at any time. Such opinions are for informational purposes only and are not intended to be investment or financial advice and should not be relied or acted upon for providing such advice. RBC GAM does not undertake any obligation or responsibility to update such opinions.

RBC GAM reserves the right at any time and without notice to change, amend or cease publication of this information.

Past performance is not indicative of future results. With all investments there is a risk of loss of all or a portion of the amount invested. Where return estimates are shown, these are provided for illustrative purposes only and should not be construed as a prediction of returns; actual returns may be higher or lower than those shown and may vary substantially, especially over shorter time periods. It is not possible to invest directly in an index.

Some of the statements contained in this material may be considered forward-looking statements which provide current expectations or forecasts of future results or events. Forward-looking statements are not guarantees of future performance or events and involve risks and uncertainties. Do not place undue reliance on these statements because actual results or events may differ materially from those described in such forward-looking statements as a result of various factors. Before making any investment decisions, we encourage you to consider all relevant factors carefully.

® / TM Trademark(s) of Royal Bank of Canada. Used under licence.

© RBC Global Asset Management Inc., 2025
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