ASrIA Annual International SRI Conference: Event Summary

ASrIA, Association for Sustainable and Responsible Investment in Asia, held Japan's first ever international sustainable and responsible investment ("SRI") conference in Tokyo from 26th-30th November, 2002. The main event on 28th-29th October at the United Nations University attracted approximately 300 delegates from Japan, other parts of Asia, the US and Europe. There was a broad range of professionals from investment groups, financial institutions, consultancy groups, development banks, corporates, academic institutions and civil society groups.

ASrIA's partner for the conference was the United Nations Environment Program Finance Initiatives (UNEP-FI). Event councilors were ERM Japan and The Good Bankers. Sponsors for the event were Citigroup Asset Management, Commerz International Capital Management (Japan), Daiwa Securities Group, International Finance Corporation, Jupiter Asset Management, Morgan Stanley Asset & Investment Trust Management, Nikko Cordial Group.

The agenda for the main conference on 28th October was "SRI and Corporates in Asia". Approximately 200 delegates attended this day. In the morning, in the UNEP-FI keynote speech and the "A-Z of SRI" panel, delegates heard overseas speakers present on the interpretation and development of SRI in other parts of the world. ASrIA and UNEP-FI signed a Memorandum of Understanding on future collaboration for the development of SRI in Asia.

After the international panel, delegates heard "The Corporate Response to SRI" from representatives of Japanese and Asian corporates who spoke about the importance and the challenges of striving to become an 'SRI company'. They highlighted the challenges of making SRI work for their individual company. One professional on the panel called SRI 'a state of mind' for his company and critical to developing the 21st century as the 'Pacific Century'.

Workshops took place in the afternoon. Much of the discussion in the morning focused on how to develop SRI for Asia and in an Asian context. The workshop "Asian Values and SRI" took this further. A lively debate occurred between Japanese SRI specialists who highlighted the cultural context for SRI in Japan and the importance of correct language, while the international SRI experts explained their needs and the issues of greatest concern when making SRI investments.

The workshop "SRI for Japan" examined the role SRI could play in revitalising Japan's economy. The group determined that the economy needed a lot more than SRI, but SRI could play its part in encouraging sustainable growth and business development. The workshop "Civil Society and Corporate Practice" covered the diverse ways in which NGOs could participate in SRI, helping to promote the practice, supporting new financial instruments and challenging corporate and investor practice in the public domain.

Feedback from this first day suggests that delegates from Japan and other parts of Asia were brought up to speed on international developments in SRI, while delegates from the US and Europe came away with greater awareness of cultural sensitivities and the issues to consider when developing SRI in Asia. The international SRI experts clearly recognize the investment prospects existing among key sustainability players in Asia..

Specifically from a Japan viewpoint, feedback indicates an understanding that SRI is developing in Japan and needs to promote an equitable social and business culture However, more practical initiatives are needed which involve the younger generation. It should be noted that the conference benefited directly from many young Japanese volunteers already committed to promoting SRI.

ASrIA released a paper entitled "SRI in Japan" at the conference. This paper is available on http://www.asria.org/events/japan/oct02/postconf/main, describes how SRI has evolved in Japan, the current status of the market and the challenges for further development of SRI in Japan.

The agenda for the main conference on 29th October was "SRI and Savings Plans in Asia". On this topic, ASrIA released a research report entitled "SRI and Pensions in Asia". This report is an analysis of the current pensions situation around the region and highlights the looming social security crisis. It describes the relevance of SRI to pensions provision in Asia and the role of pensions in helping to tackle poverty. It makes a first attempt at summarizing the most critical social and environmental challenges around the region and the role of SRI in addressing these challenges. Two important recommendations are made in the report: (i) that SRI research groups incorporate questions on pension fund provision to Asian corporates, and (ii) that SRI is a relevant investment strategy for pension funds to address the chronic social and environmental issues in the region. Please see the summary of the report attached and see www.asria.org/publications for instructions on how to obtain the report.

Approximately 200 delegates attended the second day of the conference. In the morning, delegates heard from a panel of pensions experts in "The Making of the Social Safety Net for Asia" about the critical social importance of retirement planning and pensions provisions in a part of the world were populations are rapidly aging and stock market returns have not historically provided the safety net required. There was a focus on the responsibility of the fund management industry to take control of the pensions situation and resolve the structural problems around the region, plus identify appropriate methods of providing adequate long term returns. Here the interaction of SRI with the pensions industry was highlighted.

This point was further developed in the following panel on "Pension and Life Fund View of SRI". An international group of SRI experts discussed the relevance of SRI to pension fund management. They focused on the importance of building sustainable businesses, of channeling funds to new industries focused on sustainability and of encouraging shareholder activism to make corporations more accountable At the end of the morning, Mr. Yotaro Kobayashi's keynote speech brought the audience back to the essence of SRI from a corporate perspective. He emphasized his belief that corporates exist to contribute to society, and not just in a monetary sense. He highlighted the importance of considering shareholders, but also the environment and society at large.

Workshops in the afternoon examined SRI and pensions-related issues in greater detail. In "The Emergence of 401K Plans", attendees learnt about the development of the 401K pensions systems in the US and their impact on the growth of SRI. Excellent discussion ensued on the scope for SRI in Japan following the newly introduced 401K system. "Corporate Governance and SRI" focused in on the links between good governance and accountability to all stakeholders, not just shareholders. "Exploring SRI from the Frontline" involved a detailed discussion on SRI investment strategies, examining issues such as portfolio construction and investment management technique. Finally, "The Agenda for Long Term Investment" focused on alternatives to stock market investment for pension fund management. Specifically, venture capital and direct investments into sustainable businesses could have high social impact and could be relevant pension fund investments, but obstacles such as liquidity for exits need to be addressed to make these viable options.

Feedback from the second day suggests that Asian delegates learnt much about the role of SRI in pension fund management. This was the first time the topic had been clearly defined and explained in a public forum of this size in Asia. Overseas delegates whose pension markets have already embraced SRI to a certain degree learnt about the current pensions situation around the region, and again had their thinking developed on the priorities for SRI in Asia. Some crystal ball gazing in some of the panels continued a theme introduced by the UNEP-FI keynote speech by on the first day, that SRI issues will probably be incorporated into mainstream risk assessment and portfolio construction in 10-20 years time.

In summary, the main conference provided an international learning platform for developing SRI in Asia. Global and local experts had the chance to network extensively, many for the first time. They began important discussions on SRI and Asian issues and had the chance to develop their thinking on practical solutions for SRI in the region. Despite local cultures, we have global sustainability challenges that must be addressed in the global markets where capital flows freely between countries regardless of different cultures.

The week-end prior to the main event was the hot networking opportunity. ASrIA took a group of international SRI experts to a traditional Japanese hot-spring (onsen) deep in the hills to the north-west of Tokyo. The relaxed bathing atmosphere, plus the feast of a traditional Japanese dinner and some karaoke provided inspiration for excellent discussion and much goodwill ready for start of the conference .

On Sunday afternoon, the first ever global Social Investment Forum meeting with representatives from key SIFs (US, UK, Europe, Australia, Asia) was held. We discussed the importance of increased co-operation and information exchange in order to develop SRI successfully around the world. The group will be following up on a number of initiatives for the future including collaboration on several global research initiatives, the development of global transparency guidelines for SRI funds and the potential for a future global SRI summit.

A dinner for ASrIA members was held on Sunday evening. This gave members the chance to get to know each other and the ASrIA team also presented a 2002 review, plus initial goals for the 2003 program. This presentation can be viewed on www.asria.org/events/japan/oct02/postconf/main and offers a comprehensive explanation of ASrIA's work and achievements.

After the main event, on 30th October, Daiwa Securities hosted a day of 'company visits' for a group of international SRI experts. The group visited Sony Corporation, Cosmo Oil, Daiwa Group, Dow Mining and Ito-Yokado. SRI experts had the chance to understand how Japanese companies from different sectors are including sustainability thinking in business strategy. It also gave the companies an opportunity to learn about current concerns within the international SRI community. Both sides found the experience informative!