1. www.asria.org SRI: Driving Change in Asian Markets Melissa Brown, Executive Director 22 October 2004 Association for Sustainable & Responsible Investment In Asia

2. www.asria.org SRI: Driving Change in Asian Markets  Establishing clearer standards of global best practice  Opening up new areas of debate about disclosure and country-level versus global norms  Bringing investors into a more active dialogue with regulators, policymakers, and the accounting profession  Preparing markets for a broader shareholder base and long-term investing Management of long-term risks creates long-term value for companies, investors, and markets

3. www.asria.org Analyzing Corporate Risks and Opportunities  The Chinese equity market: –Maturing large caps –Volatile small- and mid-cap growth stocks  Gap between laws covering SEE risks and enforcement  China operations are the main source of SRI risk for many multinationals  Due diligence and disclosure standards Markets remember scandals

4. www.asria.org Asian Companies in Sustainability Indices  Growing participation in the FTSE4Good and DJSI global sustainability indices  Australian and Japanese companies dominate the DJSI and the FTSE4Good  Companies to watch: –Samsung Electronics, Hyundai Motor –TSMC, Chartered Semi,Samsung SDI, Li & Fung –City Developments, SIA, BAT Malaysia,Siam Cement – MTRC, KMB, Hang Seng Bank,Swire, PCCW Time for Chinese companies to join their peers

5. www.asria.org SRI Globally: US$2.5 Trillion US$14.3bn funds & church assets US$2.18tn in funds and portfolios Canada US$38.2bn Japan and rest of Asia US$2.5bn UK: US$2.5bn in funds plus US$250bn portfolios Rest of Europe US$10bn in funds More in portfolios

6. www.asria.org Investors' Interests – Japan, UK, USA

7. www.asria.org What Dominates the Asian SRI Agenda?  Corporate governance: the headline issue –Higher standards for boards and regulators –Stewardship of state-owned companies  Labor issues are prominent on countries which link to the global supply chain  Environment—an issue in every country. Watch for high impact sectors: –Energy, power, building materials, metal & mining  Global investors are looking for: –Audited supply chains, ISO14001, codes of conduct Expectations are rising for Chinese companies

8. www.asria.org China’s Industries of the Future?  Renewable energy  Information technology  Telecommunication  Mass transport  Education  Healthcare  Multimedia  Water management

9. www.asria.org Sustainable Pensions Strategies  A focus on long-term risk-adjusted returns  SRI is emerging as a core strategy for pension management  Spotlight on fiduciaries  more pressure for disclosure and stewardship  Sustainability reporting is becoming a tool for attracting customers and investors Long-term investment needs must shape China’s near-term market decisions

10. www.asria.org 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

11. www.asria.org ASrIA  A focus for investment and financial community activity –A member-backed not-for-profit –We seek corporate and NGO input as well  Research on issues –SRI country reports –Labor standards in China –How Japanese investors are defining SRI issues –Pensions in Asia  Resources for fund managers and policymakers

12. www.asria.org ASrIA.org.. The "Go To " site for SRI in Asia 6000+ hits per day …. and growing 5,400 ebulletin subscribers FREE news service Japanese & Chinese Sections