www'asria'org

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SRI - A Global Revolution Tessa Tennant,
Chair 24 October 2003
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Corporate Governance

• The governance of the corporation is now as
  important in the world economy as the government
  of countries
• James Wolfensohn, President, The World Bank Group
• .... Investor Governance Matters too
• "Investment is the process of foregoing immediate
  expenditures in order to build a more prosperous
  future. What kind of future are we now
  building?"
• The New Global Investors, Robert Monks 2001

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What is Social Responsibility?

• Social responsibility is not a question of
  charity, its a question of self-interest its
  an issue of how were going to keep our planet
  stable so that your businesses survive
• James Wolfenson, President of World Bank,
• Corporate Leaders in Chicago, December 2nd 2002

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What is SRI

• Mechanism for achieving sustainable economic
  development worldwide.
• The facility for investors to be more consistent
  in their view of the world and the values they
  hold.
• A risk management tool for reducing beta and
  enhancing earnings.

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Introducing ASrIA
Conferences, workshops, seminars
100 members in first year global and local
Not-for-profit membership association1
Research issues and opportunities
Awareness raising website, media
1 Sister organisation to UKSIF and US SIF
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ASrIA 2001 - 2003

• ASrIA is a not-for-profit membership association
  dedicated to promoting sustainable and
  responsible investment (SRI) practice in Asia.
• over 100 members including investment
  institutions managing over US2 trillion in
  assets.
• Held 20 events around the Asia Pacific Region
• Presenting at many events in Asia and Globally
• Conducting Research on SRI issues
• Significant press coverage media, TV, radio
• Website launch average 1800 hits per day, 5000
  e-bulletin subscribers

64 Corporate Members and 40 Associate Members
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ASrIA.org.. the Go To site for SRI in Asia
FREE news service
Chinese Section
5,200 ebulletin subscribers
5400 hits per day
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4 Reasons why SRI is growing

• Fundamental Rationale
• SRI product choice and strategies
• Performance
• Legislation and Pressures for higher corporate
  governance standards
• Investor Demand

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Five World Economy
Linear Economy
Energy
Fossil Fuels,Nuclear
CO2, Nox,SOx
Materials
Heavy metalsCarcinogens,EDCs
Rich Ore Deposits,Ancient Forests etc..
Products and Services
Slide thanks to Morley FM
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One World Economy
Cycling Economy
Energy
Renewable Sources
Wastes
Bio-degradable and reusablewastes
Materials
SustainablyManagedResources
Quality of Life Enhancers
Slide adapted from Morley FM
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SRI Methodologies

• Ethical Investment
• Green Investment
• Socially Responsible Investment
• Sustainable Responsible Investment

• Negative screening

• Positive screening

• Engagement/Advocacy

• Community Investment

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Common SRI Criteria
Environment
Social
Ethical
Energy Water Use Air Pollution Wastes
Toxics Transport ISO 14000 Resource
Productivity Biodiversity Product Impact
Profit Sharing Welfare at Work Equal
Opportunities Civil/Employee Actions Community
Public Policy Supply Chain Public Disclosure
Military Gambling Pornography Alcohol Tobacco Repr
essive Regimes Genetic Engineering Nuclear Animal
Testing
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Investors Interests Japan, UK, USA
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SRI Globally
Canada US 32 bn
UK US2.5 bn in funds plus US250 bn portfolios
Japan US 1 bn in funds
US2.16 tn in funds and portfolios
Europe 336bn institutional funds
US10 bn funds church assets
.updated and more precise data coming soon
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Global Growth in SRI Funds
US BN
192 Funds
22 CAGR
U.S.
US MM
67 Funds
U.K.1
49 CAGR
Source UBS Warburg - 1999 US Trends Report,
USSIF, EIRIS 1 U.K. Retail volume only. Does not
include institutional, predicted to be approx.
GBP120 billion end 2001
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Domini 400 Social Index SP 500 Comparative
Performance Since Inception in May 1990 to June
2003
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5 Years July 1998 to July 2003
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DJSI World USD Performance and Risk

• DJSI World / DJGI World
• Correlation 0.9644 Tracking Error 4.37
• DJSI Volatility 16.33 DJGI Volatility 15.10
• December 1993 - June 2003, USD, Price Index

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http//www.sustainability-index.com/
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CARBON DISCLOSURE PROJECT

• 35 institutional investors with assets in excess
  of 4.5 trillion
• 31st May 2002, they wrote to the Chair of the
  Board of the FT500Global. The largest companies
  in the world as measured by market capitalization
• asking them to provide investment relevant
  information relating to greenhouse gas
  mitigation.
• analysis undertaken by Innovest Strategic Value
  Advisers, US. Published February 2003
• "The project demonstrates that many investors
  have a very comprehensive view of their fiduciary
  duties to invest prudently
• Prime Minister Blair, February 2003

www.cdproject.net
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SRI and Pensions

• SRI about understanding societal risks
• Broad Range of SRI styles now exist
• SRI and CG enhance fiduciary role
• Governments legislating eg UK and Australia
• Conferences in 2003
• The North European Pension Investing Summit and
  SRI Congress. Stockholm 3rd June 2003
  www.imn.org/a474/agenda.dhtml 
• Long-term Fund Performance Factoring Engagement
  and SRI Policies 8th 9th September 2003
  Central London www.marcusevansconferences.com/
• Towards a more Sustainable Retirement System The
  Quest for new Governance and Asset Management
  Strategies for Pension Funds. 15th October 2003,
  Zurich www.sustainability-zurich.org
• UNEP Finance Initiative Global Roundtable
  Defining Sustainable Investment Strategies for
  Pension Funds 20 October 2003 Tokyo
  www.unepfi.net/tokyo

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UK Trustees Concerns
Funds of over 7bn felt more strongly about good
Corporate Governance
Source UK Social Investment Forum
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Proxy Voting regulations in the USA

• SEC regulations passed January 2003
• Affect some 3,700 mutual funds and
  6,200investment advisers who have the power to
  vote shares on behalf of clients.
• They must report to their clients and the public
• their policies and procedures for voting in
  corporate elections
• And how they voted on each issue at each company.
• New rules in full effect for the 2004 proxy
  season subject to a final review for
  burdensomeness by the Office of Management
  Budget.