ESG roundup: Diversified indices, EIRIS, Burma investments
GLOBAL – A new set of indices have been launched that aim to build a bridge between mainstream and sustainability or environmental, social and governance (ESG) investors.
The Dow Jones Sustainability Diversified Indices Family (DJSI Diversified Family) by sustainability investing specialist RobecoSAM and S&P Dow Jones Indices are designed to have similar risk/return characteristics to standard global equity benchmarks but with significantly greater representation to more sustainable companies.
Guido Giese, head of indexes, told IPE: "We launched the diversified family in response to increasing demand we have seen in the market for a sustainability index that gives investors the opportunity to gain exposure to sustainability without taking on too much risk relative to their standard benchmark.
"The main index of the diversified family, for example, holds 677 components, compared with the 340 of the traditional DJSI.
"It is an easier entry point for investors than the pure play DJSI, which was overweight European companies."
The DJSI Diversified Family covers 26 developed market and 20 emerging market countries and replicates the regional and sector allocation of the S&P Global LargeMidCap Index, while taking sustainability performance into account.
Companies' sustainability profiles are evaluated using RobecoSAM's proprietary corporate sustainability assessment (CSA) methodology.
The diversified family leverages the same research capabilities used to construct the existing DJSI.
In addition, it uses specific rules to ensure country, sector and size diversification.
In other news, research organisation EIRIS has welcomed the final Burma Responsible Investment Reporting Requirements report by the US government, which mandates US corporations newly investing in the country to report on their operations, policies, procedures and impacts.
Peter Webster, chief executive at EIRIS, said: "It is a great step forward for investors across the globe, that the US has taken the decision to issue responsible investment reporting requirements for US businesses looking to invest in Burma.
"As we know, investment with Burma has been, and for many is still, deemed to be problematic. I hope these requirements, along with ongoing discussions stemming from last month's G8 conference, mark the starting point in making investment in Burma more transparent, especially with regard to human rights, and that other countries follow the US lead."
Over the past year, the US government has paved the way for increased US investment in Burma despite ongoing violence in resource-rich areas.
The reporting requirements are attached to a general license authorising new investment in Burma issued in July 2012.
Under the umbrella of EIRIS Conflict Risk Network, investors have been urging the US government to exercise caution in its policy toward Burma, given the fragile and reversible state of reforms in the country.
Building on Conflict Risk Network's April 2012 report, Not Open for Business: Despite Elections, Investor Risk Remains High in Burma, investors raised concerns about the scope and timing of the relaxation of US sanctions in a May 2012 letter to president Barack Obama.