Responsible and ethical investors are going long on EMs: Investors with environmental, social, and governance (ESG) mandates are turning to emerging markets, which have traditionally been slow on the uptake of green investments, Bloomberg says. With slightly higher yields than developed markets and “without too much risk-taking,” emerging markets are fund managers’ new go-to for cheaper assets that, in the long term, will meet ESG goals. “Money managers who have already spent time digging around for sustainable investments in emerging markets say ESG is definitely gaining a foothold, but from a rocky beginning,” the business information service says.

Who’s in? Europe’s Nordea Asset Management has earmarked about a fifth of its newly-launched green bond fund to emerging markets, says Thede Ruest, head of emerging debt markets at Nordea’s investment management unit in Copenhagen. And the Evli Emerging Frontier Fund — a Nordic fund management company owned by Finland’s Evli Bank — has a portfolio (pdf) of around EUR 146.5 mn and is also particularly focused on assessing “unquantifiable good governance factors and compliance with the principles of the UN Global Compact” when making its investments.

Greenwashing is always a concern — but that risk is less present in EMs, where companies are “under less pressure to disclose ESG metrics,” meaning they’re unlikely to claim a green reputation if it’s not really there. The risk of greenwashing is a serious red flag for investors as a global explosion in ESG- and sustainability-related assets has been met with an uptick in misleading ESG credentials.

One strategy some investors swear by: Look to invest in companies that are making progress on their ESG credentials, rather than those that are opting for “established names” that seem to be as green as they come at first glance. On the financial side, these lower-profile companies are likely to be cheaper to invest in, seeing as companies with “stellar ESG reputations” tend to be expensive and over-investing in them could add to the risk of an ESG bubble. And on the, you know, sustainability side, investing in companies that are still working on getting their ESG ducks in a row is more beneficial to long-term sustainability goals. “Investing only in companies that have high ESG standards doesn’t fix problems,” one pundit says.

The bottom line: Locking down the perfect ESG shot in EMs is no easy feat, so do your homework. Investors need to do thorough research on any investment, but that necessity becomes increasingly important when hitting up emerging markets — not least because these markets typically tend to struggle with transparency.