There are a lot of opportunities we're going to be exploring in the responsible investing space in 2024, from carbon markets, which are developing rapidly, to blended finance, which is expanding, to the changing nature of the labor markets and how diversity, equity and inclusion can be a competitive advantage for companies.
One of the other areas of focus within responsible investing is emerging markets, which are really starting to take center stage. And in the emerging markets, what we see is the true intersection of environmental and social factors. We see that in things like just transition, where emerging countries need to think about transitioning away from fossil fuels but doing so in a way that does not disrupt the social fabric of their economies.
We also see that in the intersection of climate change and modern slavery, where many emerging markets are faced with physical climate change risks; they're seeing increased incidence of typhoons, or droughts, that can lead to population disruption and can make populations more vulnerable to modern slavery and human trafficking.
Blended finance is one way to bring capital to emerging markets, much needed capital for biodiversity or other environmental challenges. Blended finance brings together developed-market governments, emerging-market governments and private investors. The developed-market government provides a guarantee that lowers the cost of finance to the emerging-market investor, and it also expands the attractiveness to private investors because the credit risk is lowered.
There are other areas of responsible investing that are equally as interesting. For example, biodiversity has been a big topic of research for our team over the past year, and in 2024, we’re going to be diving into a specific area of biodiversity in terms of water. Water issues will be at the forefront of investors’ minds over the next several years as communities, companies, countries need to deal with the risks around water scarcity, around water pollution and sustainable water management.
Biodiversity and water scarcity are concerns that we need to think about globally, both within the developed markets, as we're seeing here in the United States, as well as across the emerging markets.