Emerging Markets Inflection Points

How Are Transition Trends Creating Opportunities in Emerging Markets?

As we discussed in the previous issue of Emerging Markets Inflection Points, sustainability, economic growth and the potential for competitive returns form the core of our Emerging Market Transition strategy. Through this lens, we look for EM companies that are entering new markets, generating new revenue streams, reducing costs or enhancing efficiencies as they become more sustainable.

For example, some emerging markets are playing an increasingly important role in clean mobility and are driving the global electric vehicle (EV) boom. Automotive companies in China, Brazil and Indonesia are seeing significant revenue growth by capturing domestic EV market share and accelerating EV exports to other countries.

Examples of how EM companies are benefiting from transition-related strategies include:

As a reminder, we consider a wide range of EM companies that fit this framework. Some are in the early stages of their transition-related efforts, while others are experienced first-movers. We also believe that companies pursue and benefit from sustainability efforts that go beyond a singular focus on reducing carbon emissions.

What Can Torrent Pharmaceuticals Tell Us About EM Transition Efforts?

Torrent Pharmaceuticals, an India-based firm that manufactures branded generics, exemplifies an EM company employing a transition strategy designed to boost business growth by lowering costs and emphasizing increased sustainability within the pharmaceutical industry.

Torrent has accelerated its sustainability efforts, as evidenced, in part, by its significantly improved sustainability disclosures. This increased transparency reflects the company’s focus on growth and environmental stewardship.

Most notably, Torrent has reduced its Scope 1 and 2 emissions by 32% relative to its fiscal year (FY) 2019-2020 baseline and has set an even more ambitious goal of a 70% reduction by FY 2029-2030.¹ Torrent’s progress reflects initiatives to expand renewable energy use, switch to lower-emission fuels and improve manufacturing efficiency. Together, these actions may help lower operating costs, reduce exposure to energy price volatility and strengthen operational resilience.

Torrent is also making progress in resource efficiency, achieving year-over-year reductions in water withdrawals and consumption. Its waste management performance remains particularly strong, with 98% of total waste diverted from landfills. The company recycles 100% of its nonhazardous waste, and 75% of its operational sites are now classified as zero-waste-to-landfill.²

These accomplishments are significant outcomes for a resource-intensive industry in which water availability, waste management and environmental compliance can directly affect production and profitability.

At the same time, Torrent continues to target areas for improvement, including Scope 3 emissions. Reporting in this area remains incomplete, and the company’s emissions intensity increased modestly. However, Torrent is working toward a 10% reduction in Scope 3 emissions intensity by FY 2029-2030 – significantly expanding its transition strategy beyond its own operations and into its supply chain.³

In our view, Torrent’s improving sustainability performance complements the company’s other perceived strengths, including manufacturing quality, cost optimization, regulatory readiness and operational efficiency.

As sustainability becomes more deeply embedded in Torrent’s business model, we believe this will help increase the company’s long-term competitiveness and resilience.