The inclusion of environmental, social and governance criteria in the screening of investments is increasing within Asian investment funds. At the CSR Asia Summit in Bangkok, two institutions at the forefront of this trend met to discuss the future of responsible investment.

Claire McLetchie from ASrIA provided an overview of the concepts of SRI “Sustainable Responsible Investment” and ESG “Environmental, Social and Governance” issues. She presented the results so far from the “Carbon Disclosure Project”, which tracks company responses to climate change issues globally. Although a rising number of Asian companies are disclosing their responses, the level of awareness and responsiveness is still very low, with less than half of companies responding to requests for information. In a more positive note, the panellist noted that pension funds and asset managers globally are increasingly including ESG criteria and that convergence of standards is taking place. The UN’s Principles for Responsible Investment currently have 250 signatories, including a handful in the major Asian economies.

Chanchain Supasagee spoke from the perspective of one of these funds - the Thailand Government Pension Fund. The fund is the currently the only public pension fund to have signed up to the UN’s Principles for Responsible Investment (PRI). The Thailand Government Pension Fund attaches the Principles for Responsible Investment to investment mandates for its fund managers. Currently, the key focus is on governance, but environmental and social issues are gradually being phased in as investment criteria.

The panel discussed the issue of Western bias in ESG criteria. The panel members agreed that while the issues involved were universal, the entry-level could be lowered for Asian businesses who are only getting started on implementing environmental and social performance measures. Chanchai Supasagee raised the key issue that most Thai businesses would not be included if the bar was set to high. The key was to engage and encourage continuous awareness and improvements “If they are not beautiful now – we can make them beautiful later”. He also warned of the inherent limitations of investors “we are not auditors”. Investors will have to judge the information given to them at face value, so promoting the use of common standards like externally verified GRI reports was key to investors.

Claire McLetchie, ASrIA

Chanchai Supasagee, Government Pension Fund, Thailand

CSR Asia: http://csr-asia.com/weekly_detail.php?id=11529