This was the topic of the fourth annual Who Cares Wins event which brought together more than 80 investment professionals from leading asset owners, asset managers, investment research and consulting institutions. It took place on 5 July 2007 in Geneva and was facilitated by onValues on behalf of the Federal Department of Foreign Affairs, the International Finance Corporation and the UN Global Compact. The goals of the event were to 1) assess the importance of environmental, social and governance (ESG) issues in emerging markets investments; 2) showcase and reinforce best-practice in the consideration of ESG issues in asset management and investment research; 3) identify opportunities for future developments and collaboration in this area.
New Frontiers in Emerging Markets Investment
The Enhanced Analytics Initiative (EAI), an alliance of asset owners and managers who collectively represent more than 1.9 trillion (US$ 2.6 trillion) in assets, commissioned onValues to produce a case study of the quality of investment research on mergers and acquisitions (M&A). The study investigated whether research providers covering M&A transactions are addressing the full range of issues that may be material to long-term investors. Depending on the type of M&A activity, these issues might include the impact of combining different corporate governance regimes and corporate cultures, the role of management, potential impacts on intangible assets, and environmental liabilities acquired in a transaction. The study's main conclusions are presented in the public summary report below
Summary report on EAI case study
The survey per end of December of 2006 shows an impressive increase in the size of this market compared to the previous year (17.9 billion compared to 10.6 billion CHF). The survey covered 21 providers and different investment products and services (funds, mandates, structured products). The growth in volume of ESG-inclusive funds in 2006 (+55.7%) was more than five times as big as the growth of the overall Swiss fund market. An increasing interest by private banking clients and the growing demand for structured products and funds dedicated to sustainable themes, such as alternative energy and water, were seen as being main drivers for this development.
In the latest edition of the Environmental Finance magazine, Gordon Hagart and Ivo Knoepfel provide an overview and assessment of current trends in the ESG-inclusive investment field. More sophisticated applications of environmental, social and governance (ESG) information to a wider range of asset classes and financial products could mean that in future ESG issues increasingly become drivers of financial product innovation rather than niche concerns, argue the authors.
Environmental Finance article