Sustainability
Bursa Malaysia has always advocated corporate responsibility as key to sustainability. Today, sustainability, which supports stakeholder value creation, should be the main focus of every responsible company.
Tip of the Week: Approximately only 10 percent of every landfill can be cleaned up.
Introduction
Sustainable Investments
Globally, there is an increasing focus on sustainable investment, with over 800 asset owners, investment managers and professional service partners subscribing to the United Nations Principles for Responsible Investment (UNPRI). As at 31 December 2009, the 2010 European Sustainable and Responsible Investment (SRI) Market estimates that total SRI assets shot up to USD 7 trillion1. The socially responsible investments market is expected to grow to USD 26.5 trillion by 2015, which is estimated to be 15% to 20% of global Assets Under Management2.
More organisations are committing themselves to embedding environmental, social and governance criteria in their investment decisions. Regionally, the Association for Sustainable and Responsible Investment in Asia (ASrIA), based in Hong Kong, is a membership association of financial and non-financial companies that promotes SRI in Asia including with its Malaysian partners3.We are also seeing an increasing number of sustainability indices. developed under the Dow Jones Sustainability Indexes series (DJSI), FTSE4Good, Ethibel Sustainability Index and MSCI Environment, Social and Governance Indices series in many countries.
The DJSI are the first global indexes established to track the financial performance of sustainability-driven companies globally. Sustainability portfolios are managed using reliable and objective benchmarks based on the cooperation between the Dow Jones Indexes, STOXX Limited and Sustainable Asset Management. At present, the DJSI4 has launched the DJSI Asia Pacific, DJSI Asia Pacific 40 and DJSI Japan 40, DJSI Korea, and the DJSI Korea 20 in Asia.
The FTSE4Good Indexes5 were launched in 2001 and these indices are the best established within FTSE's responsible investment range. Companies are selected based on how well they manage their environmental and social risks, using criteria that incorporate globally recognised sustainability standards.
An overview of Sustainable Investor's screening criteria when assessing companies:
FTSE4Good5
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Environmental Criteria
- SRI products with embedded environmental criteria
- Engagement programme
- Environmental credit risk assessment
- Integration of financial and environmental factors
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Social & Stakeholder Criteria
- Equal opportunities
- Diversity policies
- Management systems
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Human Rights Criteria
- Public policies
- Board responsibility
- Management systems
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Supply Chain Labour Standards Criteria
- Policy / Labour codes
- Supply chain monitoring
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Countering Bribery Criteria
- Prohibits giving and receiving bribes
- Obey all relevant laws
- Restrict and controls facilitation payments
Sustainable Asset Management (SAM) 6
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Environmental Dimension
- Eco-efficiency
- Environmental reporting
- Environmental policies and management systems
- Product stewardship
- Climate strategy
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Social Dimensions
- Corporate citizenship
- Labor practice indicators
- Human capital development
- Social reporting
- Talent attraction & retention
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Economic Dimension
- Codes of conduct
- Compliance
- Corruption & bribery
- Corporate governance
- Risk & crisis management
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Other sector-specific criteria, all of which fall under one of the three dimensions
Note: SAM's assessment of corporate sustainability practices provides the basis for the Dow Jones Sustainability Indexes (DJSI)6.
1 Robeco and Booz & Co, "Responsible Investing: a Paradigm shift", 2008
2 ASrIA, www.asria.org
3 Dow Jones Sustainability Indexes, www.sustainability-index.com, accessed May 2010
4 FTSE4Good, www.ftse.com accessed August 2010
5 Adapted from FTSE4Good, www.ftse.com accessed August 2010
6 Sustainable Asset Management, www.sam-group.com accessed August 2010