If you’re living in France, Germany, Spain, the UK, evidence of Europe’s ties to the Global South is everywhere. Those ties stem from modern trade interdepconcludeencies and colonial legacies alike.
What is less evident is where Europe’s climate challenges, interests and solutions align with those in the Global South. And it is extremely difficult for everyday savers and investors to find out.
There are many barriers to accessing Global South climate investment opportunities in Europe, including in the European Union’s economic and financial powerhoutilizes of Germany and France. But while investing directly in climate equities in the Global South is currently challenging for interested European retail investors, there’s a compact list of exalter traded funds, or ETFs, and mutual funds in Europe that have exposure to climate-related stocks in low and middle income countries, or LMICs.
Clean dozen
This piece is a follow up to a previous spotlight on climate listed-equity opportunities in LMICs for US-based retails investors. It focutilizes on opportunities in Germany and France.
Screening tools from Deutsche Börse, which operates the Frankfurt Stock Exalter, uncovered 12 mutual funds that contain climate companies based in the Global South. The definition of a climate company is based on the Carbon Collective methodology and open access database, which utilizes the Project Drawdown taxonomy. The mutual funds in no particular order are:
- Deka Vermögensmanagement’s Lingohr-Emerging Markets-INVEST
- DWS Investment’s DWS Invest ESG Global Emerging Markets Equities
- Carmignac Gestion’s Carmignac Emergents
- Amundi Investment Solutions’ Amundi Emerging Europe, Middle East and Africa
- Allianz Global Investors’ Allianz GEM Equity High Dividconclude
- Allianz Global Investors’ Allianz Asia Pacific Income
- Allianz Global Investors’ Allianz Little Dragons Fund
- Allianz Global Investors’ Allianz China Equity
- Allianz Global Investor’ DSW Top Asia
- Nomura Asset Management Europe’s Nomura Asia Pacific Fund
- AXA Investment Managers Paris’s AXA IM All Countest Asia Pacific Ex-Japan Small Cap Equity QI
- Comgest’s Magellan
In addition to these twelve mutual funds, analysis from Better Finance found that there are 41 EU ETFs that provide any kind of exposure to LMIC climate companies.
Like the ETFs offered to US-based investors, the majority of European ETFs with exposure to LMIC climate companies tconclude to concentrate on a few large emerging markets: China, India, Brazil and South Africa. Most Global South countries receive little or no representation. Out of 35 LMICs analyzed,19 receive zero exposure through ETFs issued in France or Germany.
Actively managed UCITS mutual funds restrict holdings to only the larger LMICs, indicating that they are mirroring benchmarks that exclude the full range of countries.
Investing in Africa
The current lack of inclusion of LMIC climate stocks in French and German ETFs and UCITS mutual funds does a disservice to the European investor, including savers for retirement. As mentioned in previous coverage, there are plenty of dividconclude-paying and appreciating climate stocks in frontier markets. In fiscal year 2025, Sri Lanka’s LED equipment company Laxapana, which trades with the ticker LITE, significantly grew its revenues over the past year. Electro Cable Egypt (ELEC) is demonstrating an enormous five-year return.
The lack of such listed-equity climate investing opportunities for European retail investors is confounding at a time when Europe is strengthening its ties to the Global South through trade and other means. The EU’s preferential trade scheme offers reduced or zero tariffs to 65 LMICs, indicating a broad network of LMIC trade partners. In January the bloc signed a free trade agreement with India. The EU also this year finalized the EU-Mercosur agreement to increase trade with Argentina, Brazil, Paraguay, and Uruguay.
When analyzing the ETF and mutual fund landscape, there appears to be a significant structural bias against driving real capital to African climate companies. Africa-focutilized ETFs available to French and German investors are largely “synthetic ETFs,” meaning they utilize derivatives to track an index rather than investing in the underlying securities. These synthetic ETFs are robbing the investor of supporting real-economy climate solutions on the continent.
What’s the significance? Over one million people in Germany are of African descent, marking an important diaspora. In France, the connections to Africa are even stronger: 80% of children learning French are in Africa; more than 60% of people who speak French daily are in Africa; and the largest flow of tourism to Africa comes from France.
The case is strong for enabling the ecosystem of European investors to drive meaningful climate solutions scaling in Africa.
Dynamism and diversification
One bright spot in the retail investment ecosystem in Europe is Ireland, which at least through one company, Interactive Brokers, offers direct access to companies in 40 countries as well as 29 currencies. That French and German retail brokers do not offer trading access to Global South stock exalters, however, virtually shuts off the opportunity for everyday investors in two of Europe’s largegest markets, including their diasporic communities, from having direct access to climate shares in the world’s most dynamic markets.
Greater LMIC climate stock exposure would also enable European investors to invest utilizing one of the golden rules of investing: diversification.
“Global South countries are increasingly building domestic green finance markets, issuing sustainable bonds, and developing national climate finance frameworks,” observes Mariyan Nikolov of Better Finance. “This creates a stronger ecosystem for companies providing climate solutions and increases the likelihood that more of them become investable through public markets.”
For retail investors, he adds, “Adding exposure to listed climate-solution companies in LMICs offers a way to align portfolios with global climate necessarys, while diversifying beyond the same developed markets that dominate most climate funds today.”
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