Environmental, social and governance issues in emerging markets investments
For the third time, Mistra invited a select group of asset managers, investors, academics and independent researchers to discuss environmental, social and governance (ESG) issues relevant to investors.
The workshop, held at Mistra's office on 17 October 2007, focused on investments in emerging markets. In their introductory remarks, Mistra's Ola Engelmark and Eva Thörnelöf explained the motives for hosting such events under the Mistra Sustainable Investments Platform: On the one hand, Mistra has launched an academic research programme on sustainable investments and is interested in academics and investment professionals working together on these issues.On the other, Mistra has a direct interest in this topic through the management of its SEK 3.7 billion endowment, a significant portion of which is currently invested in emerging markets equity and fixed income.Participants in the workshop confirmed the hypothesis of the high financial relevance of ESG issues to companies based in emerging markets. At macroeconomic level, there are observable effects on economic growth rates associated with such issues as political stability, governance, regulatory frameworks, corruption and education levels.
The two guest speakers, Katja Karas from BankInvest Gruppen and Alan Nesbit from First State Investments, introduced a lively discussion. It touched on ESG issues representing both risks and financial opportunities, on how investors can engage positively with companies, and on how academic research can support practitioners' work.
One interesting conclusion from the workshop was that these issues affect not only companies based in emerging markets, but increasingly also multinational companies with growing production and sales volumes in those countries. From an investor's point of view, this has major implications. Not only are such issues as environmental pollution in India, water scarcity and human rights issues in China, investor rights in South Korea and climate change impacts in various countries — to name but a few — relevant to emerging markets investments; they can also affect vast parts of global equity and fixed-income portfolios.
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Report from the workshop "Emerging markets investments: do environmental, social and governance issues matters? Download pdf (pdf, 380 kB)
