!1
Slidedeck
ESG Investment Implications in Emerging Markets
Modeling for investment in the context of the increasing impo...
!2


www.sincosinco.com

@SinCoESG

info@sincosinco.com

SinCo designs ESG
architecture for long
term sustainable
investme...
Integrating ESG in investment practice in EM

1. Beyond BRICS countries, towards frontier markets and frontiers of ESG: De...
Frameworks for ESG
Investment, and investment analysis, in frontier and emerging markets happens
across borders of regulat...
Frameworks for ESG
!5
PHOTOCREDIT: THAILAND, MAEKLONG : A train passes through a food market in Maeklong, 60 kilometers so...
!6
SINGAPORE, Singapore : A man takes pictures of buildings blanketed by haze in Singapore on June 19, 2013. Singapore’s P...
* of total number of listed companies in country
Total Companies Covered by Country
4036322824201612840
United States
3,36...
Investing in frontier markets in mining sector: resource scarcity, above-ground
risks, lesser regulated jurisdictions, com...
!9
PHOTOCREDIT: Zapiro.com


www.sincosinco.com

@SinCoESG

info@sincosinco.com

Prepared by SinCo [sincosinco.com] for Gl...
Integrating ESG in investment practice in EM

1. Beyond BRICS countries, towards frontier markets and frontiers of ESG: De...
!11
PHOTOCREDIT: HARARE, Zimbabwe : Investment manager JOHN LEGAT, Chief Executive / Imara Asset Management Zimbabwe prese...
Copyright © 2011 The Nielsen Company. Confidential and proprietary.
!12
Source: Nielsen Emerging Market Insights Consumer ...
!13
SOUTH AFRICA, Pretoria : A man leaves a note on a wall where well wishers left messages for former South African Presi...
New developments from (South) Africa have global promise

• REGULATIONS. New rules for investment management in South Afri...
Emerging Markets Project
Whitesharktrust.org15
Thank you.
...and see you in Cape Town.
























www.sincosi...
About AfricaSIF.org
Africa Sustainable Investment Forum
is an independent, Pan-African, not-
for-profit network, knowledgeb...
sustainable investment consulting
!17
DISCLAIMER
This ESG research by SinCo includes funds, firms and initiatives that
may ...
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SinCo - ESG Investment Implications in Emerging Markets

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ESG Investment Implications in Emerging Markets

Modeling for investment in the context of the increasing importance of environmental, social and corporate governance (ESG) factors in frontier and emerging markets.

Prepared by SinCo for Global Webinar - ESG Investment Implications in Emerging Markets. Hosted by MSCI ESG
with Investec Asset Management, SinCo and AfricaSIF.org. 11 July 2013 4PM Cape Town 10AM Boston #ESGinEM

Graham Sinclair
Principal
SinCo
@esgarchitect
graham.sinclair@sincosinco.com
www.sincosinco.com

This information is solely for use in the webinar and does not constitute public dissemination. No part of this
proposal may be abstracted, reproduced or copied for use without written permission from SinCo for purposes
related to assessment of the proposal and its merits.

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SinCo - ESG Investment Implications in Emerging Markets

  1. 1. !1 Slidedeck ESG Investment Implications in Emerging Markets Modeling for investment in the context of the increasing importance of environmental, social and corporate governance (ESG) factors in frontier and emerging markets. Prepared by SinCo for Global Webinar - ESG Investment Implications in Emerging Markets. Hosted by MSCI ESG with Investec Asset Management, SinCo and AfricaSIF.org. 11 July 2013 4PM Cape Town 10AM Boston #ESGinEM Graham Sinclair Principal SinCo @esgarchitect graham.sinclair@sincosinco.com www.sincosinco.com @SinCoESG info@sincosinco.com SinCo designs ESG architecture for long term sustainable investment that matters. Sustainable Investment Consulting This information is solely for use in the webinar and does not constitute public dissemination. No part of this proposal may be abstracted, reproduced or copied for use without written permission from SinCo for purposes related to assessment of the proposal and its merits.
  2. 2. !2 www.sincosinco.com @SinCoESG info@sincosinco.com SinCo designs ESG architecture for long term sustainable investment that matters. Sustainable Investment Consulting • SinCo - sustainable investment consulting - is a specialist sustainable investment advisory boutique. We have no other focus, we have no conflicts of interest. We build investment conviction and competence using ESG factors in investment systems. • SinCo has a track record of building hard answers to tough questions in sustainable investment. Our clients are institutional investors, UN agencies and international NGOs, and stock exchanges. • SinCo projects have included designing sustainability indexes, expanding portfolio research on ESG factors, and designing ESG architecture across asset classes. • SinCo philosophy is that ESG issues are in every investment decision. But only some investment professionals proactively manage ESG for increased opportunity set and reduced risks exposure. Sustainable Investment Consulting SinCo designs ESG architecture for long term sustainable investment that matters.
  3. 3. Integrating ESG in investment practice in EM 1. Beyond BRICS countries, towards frontier markets and frontiers of ESG: Defining your universe of opportunity, and your portfolio entry points. Understanding the license to operate of professional investors and their portfolio companies. The scope of rules and regulations is smaller than global reputations. Relationships are critical in markets with more forms of alternative ownership models and new offerings. 2. PRI in Person outlook, the enigmatic Africa opportunity: PRIiP2013 has an important footprint effect for PRI, leveraging strategic opportunity in Africa. Introduces opportunities in fragments, the frustrating search for scale. The asset allocation decision and sector exposure may be more important than the geographic universe opportunity in Africa. Will the PRI legacy be more than FIFA FWC 2010? !3Prepared by SinCo [sincosinco.com] for Global Webinar - ESG Investment Implications in Emerging Markets Hosted by MSCI ESG with Investec Asset Management, SinCo and AfricaSIF.org. 11 July 7:00 AM PDT (San Francisco). Copyright SinCo 2013.
  4. 4. Frameworks for ESG Investment, and investment analysis, in frontier and emerging markets happens across borders of regulations, guidelines and laws. ESG may act as a proxy for advanced due diligence or a marker for absent rules in the marketplace. !4 Lance Armstrong, former champion cyclist, "never tested positive". PHOTOCREDIT: Reuters/Getty Images 2013 www.sincosinco.com @SinCoESG info@sincosinco.com Prepared by SinCo [sincosinco.com] for Global Webinar - ESG Investment Implications in Emerging Markets Hosted by MSCI ESG with Investec Asset Management, SinCo and AfricaSIF.org. 11 July 2013 4PM Cape Town 10AM Boston #ESGinEM. Copyright SinCo 2013.
  5. 5. Frameworks for ESG !5 PHOTOCREDIT: THAILAND, MAEKLONG : A train passes through a food market in Maeklong, 60 kilometers south-west of Bangkok. Several times a day, shopkeepers swiftly pack up their food stalls and pull back their canopies to let the trains pass. AFP PHOTO/Christophe ARCHAMBAULT www.sincosinco.com @SinCoESG info@sincosinco.com Navigating the new license to operate of the investment management industry in frontier and emerging markets poses the question: what value does professional money management add to (companies') growth in that market, city, or country? Prepared by SinCo [sincosinco.com] for Global Webinar - ESG Investment Implications in Emerging Markets Hosted by MSCI ESG with Investec Asset Management, SinCo and AfricaSIF.org. 11 July 2013 4PM Cape Town 10AM Boston #ESGinEM. Copyright SinCo 2013.
  6. 6. !6 SINGAPORE, Singapore : A man takes pictures of buildings blanketed by haze in Singapore on June 19, 2013. Singapore’s Pollutant Standards Index again shot above the “unhealthy" threshold of 152. AFP PHOTO/Roslan Rahman. www.sincosinco.com @SinCoESG info@sincosinco.com Investment in ongoing business enterprises, real assets and projects in frontier and emerging markets must expect different forms of ownership structure. Relationships are critical to information flows, building trust and long-term investment outcomes. And issues do not stop at lines on a map: politics is as important as economics. Prepared by SinCo [sincosinco.com] for Global Webinar - ESG Investment Implications in Emerging Markets Hosted by MSCI ESG with Investec Asset Management, SinCo and AfricaSIF.org. 11 July 2013 4PM Cape Town 10AM Boston #ESGinEM. Copyright SinCo 2013.
  7. 7. * of total number of listed companies in country Total Companies Covered by Country 4036322824201612840 United States 3,369 (26.1%*) Canada 292 (6.6%*) Japan 1,779 (47.8%*) UK 341 (17.9%*) Australia 308 (15.5%*) Brazil 121 (28.4%*) China 1,081 (32.8%*) Mexico 41 (28.5%*) Russia 48 (3.8%*) South Africa 114 (28.2%*) Chile 23 (10.1%*) Italy 59 (19.0%*)Spain 50 (24.9%*) France 111 (8.9%*) Germany 109 (8.0%*) India 690 (17.1%*) Sweden 68 (12.6%*) Malaysia 69 (7.1%*) New Zealand 16 (10.9%*) S. Korea 244 (12.4%*) 03/27/2013Data as of + The problem of data. Increasing quantity and quality of ESG ratings coverage. But variability of systems are applied. Language and jargon matter. Across regions the portfolio approach has anomalies. Differentiated ratings for E vs S vs G implies investor may need to make ex-ante decisions on relative materiality (pain) of ESG factors in regions, sectors and asset classes. !7 SOURCE: Total companies ESG coverage = 10,315. E=4,328/S=5,431/G=10,296. Bloomberg ESG used by permission. April 2013. Bloomberg L.P. Prepared by SinCo [sincosinco.com] for Global Webinar - ESG Investment Implications in Emerging Markets Hosted by MSCI ESG with Investec Asset Management, SinCo and AfricaSIF.org. 11 July 2013 4PM Cape Town 10AM Boston #ESGinEM. Copyright SinCo 2013.
  8. 8. Investing in frontier markets in mining sector: resource scarcity, above-ground risks, lesser regulated jurisdictions, community pushback, transparency, the Bumi effect. 8 PHOTOCREDIT: Caterpillar Trucks, 2012 @SinCoESG I sincosinco.com I info@sincosinco.com www.sincosinco.com @SinCoESG info@sincosinco.com
  9. 9. !9 PHOTOCREDIT: Zapiro.com www.sincosinco.com @SinCoESG info@sincosinco.com Prepared by SinCo [sincosinco.com] for Global Webinar - ESG Investment Implications in Emerging Markets Hosted by MSCI ESG with Investec Asset Management, SinCo and AfricaSIF.org. 11 July 2013 4PM Cape Town 10AM Boston #ESGinEM. Copyright SinCo 2013. Investing in frontier markets in food beverage sector: farm-to-fork supply chains, nutrition security, water intensity, packaging, obesity. Food beverage products with a good reputation is important to food companies, investors, regulators, consumers, politicians.
  10. 10. Integrating ESG in investment practice in EM 1. Beyond BRICS countries, towards frontier markets and frontiers of ESG: Defining your universe of opportunity, and your portfolio entry points. Understanding the license to operate of professional investors and their portfolio companies. The scope of rules and regulations is smaller than global reputations. Relationships are critical in markets with more forms of alternative ownership models and new offerings. 2. PRI in Person outlook, the enigmatic Africa opportunity: PRIiP2013 has an important footprint effect for PRI, leveraging strategic opportunity in Africa. Introduces opportunities in fragments, the frustrating search for scale. The asset allocation decision and sector exposure may be more important than the geographic universe opportunity in Africa. Will the PRI legacy be more than FIFA FWC 2010? !10Prepared by SinCo [sincosinco.com] for Global Webinar - ESG Investment Implications in Emerging Markets Hosted by MSCI ESG with Investec Asset Management, SinCo and AfricaSIF.org. 11 July 2013 4PM Cape Town 10AM Boston #ESGinEM. Copyright SinCo 2013.
  11. 11. !11 PHOTOCREDIT: HARARE, Zimbabwe : Investment manager JOHN LEGAT, Chief Executive / Imara Asset Management Zimbabwe presents to pension fund delegates at MN Capital Zimbabwe Pension Funds Forum, 29-30 April 2013. SinCo archive 2013. www.sincosinco.com @SinCoESG info@sincosinco.com Africa's mineral resources have historically been the source of the extraction and export trade. Now businesses in search of growth and investors in search of yield are hoping for the economies of 1 billion people on the African continent. What is their disposable income, and the security of their societies. Will local investors invest locally? Prepared by SinCo [sincosinco.com] for Global Webinar - ESG Investment Implications in Emerging Markets Hosted by MSCI ESG with Investec Asset Management, SinCo and AfricaSIF.org. 11 July 2013 4PM Cape Town 10AM Boston #ESGinEM. Copyright SinCo 2013.
  12. 12. Copyright © 2011 The Nielsen Company. Confidential and proprietary. !12 Source: Nielsen Emerging Market Insights Consumer Survey, 2011 Nervous when my money is not secured Willing to take higher risks to get higher returns Ensure every month that I have enough money in my bank account Keep money aside only for emergencies Like interacting on various transactional matters Like receiving information about new financial products Regularly listen or read about financial information or advice on the radio or on television Discuss with people about the financial products and services I have seen recently People often seek my advice on financial matters Research financial products or services very carefully before choosing one Spend today than save for tomorrow 0 20 40 60 80 100 How do African consumers view money? Financial attitudes and tendencies determine spending behaviours of African consumers
  13. 13. !13 SOUTH AFRICA, Pretoria : A man leaves a note on a wall where well wishers left messages for former South African President Nelson Mandela outside the MediClinic Heart Hospital in Pretoria July 2, 2013. Mandela, who turns 95 next month, was rushed to hospital more than three weeks ago with a recurrent lung disease. AFP PHOTO/MARCO LONGARI. www.sincosinco.com @SinCoESG info@sincosinco.com PRI is being hosted in a city, within a country and on a continent that has a long history and a demanding current reality. PRIiP2013 delegates do well to scale their rhetoric to the realities. Impact, longevity and equity matter: global asset management is $63 trillion, only $450 billion in emerging markets. Prepared by SinCo [sincosinco.com] for Global Webinar - ESG Investment Implications in Emerging Markets Hosted by MSCI ESG with Investec Asset Management, SinCo and AfricaSIF.org. 11 July 2013 4PM Cape Town 10AM Boston #ESGinEM. Copyright SinCo 2013.
  14. 14. New developments from (South) Africa have global promise • REGULATIONS. New rules for investment management in South Africa. Regulation 28 of Pension Funds Act 24/1956 effective 1 January 2012. PREAMBLE A fund has a fiduciary duty to act in the best interest of its members whose benefits depend on the responsible management of fund assets. This duty supports the adoption of a responsible investment approach to deploying capital into markets that will earn adequate risk adjusted returns suitable for the fund’s specific member profile, liquidity needs and liabilities. Prudent investing should give appropriate consideration to any factor which may materially affect the sustainable long-term performance of a fund’s assets, including factors of an environmental, social and governance character. This concept applies across all assets and categories of assets and should promote the interests of a fund in a stable and transparent environment. • FIDUCIARIES. Changing realities of role of fiduciary in professional investment management, shaping of rules and regulations for investment and doing business, and expectations of ESG. IFC-funded Sustainable Returns project hopes to increase knowledgebase of pension fund trustees. • AfricaSIF.org 2012 TRENDS REPORT. First-ever reporting of professionally managed assets investing in Africa with ESG in some way included in the process. Collaborative project includes GEPF, MSCI, Bloomberg, Investec Asset Management, SinCo, RisCura, Mergence Investment Managers, OMIGSA, and Frost Sullivan. The survey estimates that the level of sustainable investment in Africa is high with about $233 billion or 63.4% of total AuM of Africa investments is self-reported to be managed according to sustainable investment principles. This implies the African (competitive) market is material. !14Prepared by SinCo [sincosinco.com] for Global Webinar - ESG Investment Implications in Emerging Markets Hosted by MSCI ESG with Investec Asset Management, SinCo and AfricaSIF.org. 11 July 2013 4PM Cape Town 10AM Boston #ESGinEM. Copyright SinCo 2013.
  15. 15. Emerging Markets Project Whitesharktrust.org15 Thank you. ...and see you in Cape Town. www.sincosinco.com @SinCoESG info@sincosinco.com SinCo designs ESG architecture for long term sustainable investment that matters. Sustainable Investment Consulting
  16. 16. About AfricaSIF.org Africa Sustainable Investment Forum is an independent, Pan-African, not- for-profit network, knowledgebase and advocate promoting investment in sustainable development across the continent. Launched in June 2010, the AfricaSIF.org Project is run by volunteers building a network of institutions and individuals promoting sustainable investment in Africa by investors in public, private and philanthropy sectors across asset classes, countries and stakeholders from our platform at www.africasif.org. !16
  17. 17. sustainable investment consulting !17 DISCLAIMER This ESG research by SinCo includes funds, firms and initiatives that may be clients of SinCo, or the parent of, or affiliated with, a client of SinCo. SinCo ESG research reports, articles and profiles have not been submitted to, nor received approval from, the United States Securities and Exchange Commission, the Financial Services Board, or any other regulatory body. While we have exercised due care in compiling the information, we make no warranty, express or implied, regarding the accuracy, completeness or usefulness of the information and assume no liability with respect to the consequences of relying on the information for investment or other purposes. In particular, SinCo ESG research is not intended to constitute an offer, solicitation or advice to buy or sell securities. Without limiting any of the foregoing and to the maximum extent permitted by law, in no event shall SinCo have any liability regarding any of the Information for any direct, indirect, special, punitive, consequential (including lost profits) or any other damages even if notified of the possibility of such damages. The foregoing shall not exclude or limit any liability that may not by applicable law be excluded or limited. www.sincosinco.com @SinCoESG info@sincosinco.com SinCo designs ESG architecture for long term sustainable investment that matters. Sustainable Investment Consulting

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