By John Aglionby in Jakarta
Published: June 8 2009 15:39 | Last updated: June 8 2009 15:39

The Indonesian Stock Exchange on Monday launched a sustainable and responsible investment (SRI) index with a leading environmental organisation to raise investor awareness of companies' environmental and social track records.

People involved in the SRI-KEHATI index, which lists 25 companies, say it is the first single nation sustainability index in Asia outside Japan.

We have to internalise the environment into the economy, said Emil Salim, the former environment minister who founded KEHATI, the Indonesian Biodiversity Foundation. We need to raise awareness that there is more to business than just profit.

Market players believe it will take time to gain relevance because few Indonesians care about sustainability issues.

To begin with, it will mean more to the listed companies than investors, said Ida Malik of Bapindo Bumi Sekuritas. It might have more impact in the mid-to-long term because we have so many mining and resources companies that dominate the market.

Three mining, palm oil and two cement companies are in the index.

One foreign bank analyst said it would only become a benchmark if enough capital tracks it. The exchange should do some arm-twisting and marketing to make sure it stays relevant, he said.

Listed companies qualify that have assets of more than Rp1,000bn ($100m), a free float of more than 10 per cent of the shares and a positive price earning ratio. Exchange officials said 106 companies currently meet the criteria. The index will be reviewed every February and August.

Companies are judged in six areas: the environment, community involvement, good corporate governance, respect for human rights, business behaviour and labour practices.

Geoffrey Williams, of OWW Consulting, who compiled the index, admitted the scores are lower than on comparable indexes in Europe or the US. But part of the process is to get people interested in companies non-financial performance, he said.

We couldn't consider many companies because they'd never been asked to provide this information before. I expect that now they know about this index, they'll get the information together.

Copyright The Financial Times Limited 2009