BETTER FINANCE has conducted a study to assess the investment landscape for Global South climate solution equities. This study shows that European retail investors are effectively locked out of investing in climate-solution companies across most of the Global South. Despite growing demand for sustainable and climate-aligned investments, the current retail investment system in France and Germany does not allow everyday savers to channel capital to listed renewable energy, clean infrastructure, and climate-transition companies in low- and middle-income countries.
Across all major retail investment channels – direct equity trading, ETFs, and mutual funds – the same structural barrier appears. Retail investors can only reach a small number of Global South companies, which does not reflect the breadth of climate solutions operating in these regions.
Key takeaways
1. Direct equity investment is closed
French and German retail brokers do not offer trading access to Global South stock exchanges, making it very difficult for retail investors to directly invest in most low- and middle-income country companies.
2. ETFs concentrate on a few large emerging markets
Even when using ETFs, retail investors are mainly exposed to China, India, Brazil, and South Africa, while most Global South countries receive little or no representation.
3. Most Global South countries are excluded entirely
Out of 35 low- and middle-income countries analysed, 19 receive zero exposure through ETFs available to French and German retail investors.
4. Africa-focused exposure lacks real capital impact
Africa-focused ETFs available in Europe are largely synthetic, meaning they do not invest capital into African companies and therefore do not support real-economy climate solutions.
5. Mutual funds reinforce the same structural limits
Mutual funds under our scope follow narrow index universe and do not expand exposure beyond major emerging economies, offering no meaningful improvement over ETFs.
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