Hong Kong/Washington, D.C., March 28, 2006—The
Association of Sustainable and Responsible Investment in Asia (ASrIA) released
today a series of reports offering investors guidance on adding critical
new areas for value creation and risk into analysis of Asian businesses
across eight sectors. The reports, funded by the International Finance
Corporation, the private sector arm of the World Bank Group, focus on the
following sectors: automobiles; banking; metals and mining; oil, gas, and
petrochemicals; power; pulp, paper, and timber; supply chain; and technology.
They highlight key themes for sustainability investments in Asia, as well
as current disclosure norms and opportunities for global investors.
“Over the past decade, global and Asian investors have become more aware
of the impact of environmental, social, and governance variables on their
investments,” said Melissa Brown, ASrIA’s Executive Director. “Whether
it is a question of watching companies struggle with persistent environmental
challenges or evaluating the impact of labor disputes, investors in Asian
equities must increasingly look at a range of global sustainability issues
to assess the long-term value of companies.”
“Investors need a framework for assessing the growing and complex environmental,
social, and governance issues that face companies in Asia today. This report
begins the process of creating such a framework,” said IFC’s Director
of Environmental and Social Development, Rachel Kyte. “ASrIA is uniquely
placed to develop this report in Asia, and these studies are the latest
example of our cooperation with ASrIA and of the innovation in sustainable
financial markets that we seek to spur.”
The reports were launched in the United States at the Spring Meeting of
the Social Investment Forum’s International Working Group in Washington,
D.C.
Taking Stock—Key Themes
Taking Stock represents a first step toward filling a very large analytical
gap in the Asian investment literature. This gap is striking given that
Asia is the fastest growing source of sustainability risks globally, due
to its rapid growth in economic activity and in associated environmental,
social, and governance (ESG) impacts. Indeed, developed market companies
increasingly frame their discussion of these risks in terms of their activity
in Asia. Despite the growing pressure to evaluate ESG issues in developed
markets, Asian investors have had comparatively few benchmarks for rating
performance because of more subdued enforcement of regulatory standards
and less participation from minority shareholders.
The reports highlight three important key, cross-cutting risks affecting
the Asian equity investment outlook generally:
- Focused analysis of ESG risks is hampered
by limited disclosure
- Government ownership and control of many
large listed Asian companies is a critically important variable in ESG
performance
- Globalization and market development are
amplifying ESG trends linked to China and India
The reports present country, company, and market information as well as
case studies that support the following investment themes:
- Environmental issues appear to dominate the
Asian investment picture, but medium-term incentives for change are emerging
on a case-by-case basis, not systematically
- Better governance standards are a key facilitator
for improving ESG performance
- Rising public expectations are a growing
force for regulatory change
Taken together, the sector reports raise important questions about how
to shape investment strategies, reflecting the range of risks and opportunities
that sustainability analysis of Asian equities can highlight. This is particularly
relevant for large cap investors versus those who favor innovative, small
companies. It is also relevant for investors with strong country
allocation disciplines.
Taking Stock is available for free download from www.asria.org/publications.
In addition to the full report, it is possible to download an introduction
to the issues, a summary document, and individual sector reports.
The Association for Sustainable & Responsible
Investment in Asia (ASrIA), is a not-for-profit membership association
that has taken a leadership role in promoting sustainable investment in
Asia since its founding in 2001. Visit the ASrIA website at www.asria.org.
The International Financial Corporation is
the private sector arm of the World Bank Group. Its mission is to promote
sustainable private sector investment in developing and transition countries,
helping to reduce poverty and improve people's lives. IFC’s technical
assistance program in sustainable financial markets is supported by Italy,
Luxembourg, the Netherlands, Norway, and Switzerland. See the IFC website
at http://www.ifc.org/ifcext/enviro.nsf/Content/SFMF-Resources
The Social Investment Forum is a nonprofit membership organization promoting
the concept, practice, and growth of socially responsible investing. Visit
the SFI website at www.socialinvest.org