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Sydney, July 15, 2009─A new report commissioned by IFC, a member of the World Bank Group, found that environmental, social, and governance investment criteria in emerging markets continue to be embraced by a substantial segment of the asset management community despite the economic crisis.
Written by the Economist Intelligence Unit, the report found that the investment community views ESG criteria as mainstream and persistent, even in the face of portfolio shrinkage and the lure of quick financial returns.
The report surveys the attitudes of corporate executives and investment professionals. It provides a unique “before and after” snapshot of mainstream investor opinion on sustainability issues in emerging market equity investment, comparing pre-crisis (2007) to mid-crisis (2009). In 2009, 46 percent of asset owners strongly agreed with the statement “ESG issues are an important part of our research, portfolio management and manager selection,” up from 36 percent in 2007. The majority of asset owners (78 percent) think the importance of ESG factors has been amplified by the crisis and will result in greater use of ESG criteria over time.
“One of the lessons of the current crisis is that long term, strong returns depend on productive and sustainable assets managed with a strong commitment to the fundamentals of risk management, including ESG,” said Rachel Kyte, IFC Vice President for Business Advisory Services. “The financial crisis has focused minds and as a result ESG performance is coming into its own.”
The financial meltdown has brought under scrutiny traditional investment methodology where financial returns are the sole basis of analysis. Including ESG factors in the investment process casts a wider net on companies’ operations and considers their longer term sustainability. IFC’s experience and the new report show this holds true especially in emerging markets. The report highlights companies in IFC’s portfolio that are innovative and committed to ESG and have continued their strong financial performance throughout the crisis.
The report, entitled “
Sustainable Investing in Emerging Markets: Unscathed by the Financial crisis
” was made possible by donor contributions from the Netherlands, Norway, Switzerland, Luxembourg and Italy. It was launched at the joint International Corporate Governance Network (ICGN) and Principles for Responsible Investment (PRI) session on “Sustainability: Managing in a world of extra financial risk” of the 2009 ICGN Annual Conference.
IFC, a member of the World Bank Group, creates opportunity for people to escape poverty and improve their lives. We foster sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. Our new investments totaled $16.2 billion in fiscal 2008, a 34 percent increase over the previous year. For more information, visit
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