Ethical Asian investment urged for stability


There is a growing call for responsible investment in Asia that gives equal credence to business growth and environmental protection

HONG KONG, China -- Asian investors have been urged to engage in 'ethical investment,' promoting environmental and social well being together with financial growth.

Tessa Tennant, chairwoman of the Association for the Sustainable & Responsible Investment in Asia (ASRIA) said investors should begin to realize that a prosperous economy is tied with political and social stability.

Investors, are therefore, encouraged to adopt the 'triple bottom line' investing which gives equal importance to social, environmental, and financial factors.

"Many investors are after immediate gain despite the environmental and social costs. But the focus should be on investment that creates value long term, and profits that are more sustainable," Tenant said during a conference in Hong Kong on Wednesday.

ASRIA is aggressively trying to make responsible investing a mainstream concept in the Asian region, where many countries, grappling with poverty and social pressure, could not prioritize ethical issues on their agenda.

Key strategies

Tenant explains that the ethical investment has evolved throughout the years through screening, shareholder advocacy, and community investment.

Screening is the process of classifying whether companies in certain industries should be supported.

Companies in certain industries that create a negative impact on the environment and the society such as arms manufacturers, nuclear, alcohol, and tobacco trade, are given a negative screening.

But firms that operate with social and environmental considerations, and create long-term benefits for the community, are promoted and given a positive screening.

Shareholder advocacy, on the other hand, is the process of having shareholders seeking to influence company behavior on social and environmental grounds.

The other strategy is community investment, which is the process of financing a particular cause or activity in developing countries.

Tenant, however, admitted that financial returns for community investment are lower than market rates.

Nonetheless, she said their campaign is a legitimate form of investment that is slowly being recognized by international investors.

Ethical concerns

She noted that in 1999, a total of $2.16 trillion have been already been 'ethically invested' in the U.S. alone.

She also said that the introduction of the Dow Jones Sustainability Global Index, and the FTSE4Good Global Index, shows their campaign is gaining ground in the international financial arena.

In its 2001 report, the Asian Development Bank described the Asian region's environmental degradation as pervasive, accelerating, and unabated.

Tenant attributed this environmental and social concerns in developing countries being compromised to give way to investments that could create more jobs and political stability.