TBLI Asia 2010<br />Tokyo, Japan (27-28 May, 2010)<br />The Trend of SRI market  and SRI Index  Development in Korea<br />...
Introduction of the Eco-Frontier<br />Clients<br />Government<br /> & Local authorities<br />Private companies<br />Public...
Employees: 100</li></ul>Eco-Frontier Business<br /><ul><li>  ESG & Carbon Rating Service
  Green Loan Rating Service
  ESG Engagement
  Green Finance Consulting</li></ul>Sustainability/Green Finance<br />Low Carbon Green Growth <br />Strategy Consulting<br...
  Corporate Sustainability Management
  e- Sustainability Management Solution</li></ul>Energy & Environmental <br />Business Development<br /><ul><li>  Biomass ...
  Renewable Energy Business Development</li></ul>Carbon Business Development  <br /><ul><li>  CDM Project Development
  Carbon Finance
  Green Real Estate Fund</li></li></ul><li>Contents<br />1. Trends of the SRI in Korea<br />2. The SRI Index development i...
1. Trends of the SRI in Korea<br />
Green Finance <br /><ul><li>Korea supports for Green Finance through an enactment of “ Basic Act on Low Carbon Green Growth”.
  Funding to promote green growth</li></ul> - To establish funding to support a green economy and green industries<br /> -...
Initiatives on Green Finance<br /><ul><li>Korean Financial Institutions participates in International Initiatives on Green...
Growth of the SRI <br /><ul><li>The number of the SRI funds has been increased.
The SRI market is expected to further increase since Pension Funds has begun  to pay attention to SRI and Climate Change. ...
Growth of the SRI <br /><ul><li>Amount composition ratio of the SRI Funds by investment region  </li></ul>(as of 30 Apr 20...
Overview the KRX SRI Index<br /><ul><li>As a part of “Plan for Green Growth”, the SRI Index had been developed in the firs...
Considering the accessibility of information, the 330 listed companies under the 21sectors have been assessed. </li></ul>G...
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SRI Index and Development of Responsible Investments in Korea

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Su Jeong Moon, Senior analyst - Eco-frontier Sustainable Finance Center - South Korea

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SRI Index and Development of Responsible Investments in Korea

  1. 1. TBLI Asia 2010<br />Tokyo, Japan (27-28 May, 2010)<br />The Trend of SRI market and SRI Index Development in Korea<br />SuJeong Moon<br />Senior Analyst, Sustainable Finance Center<br />Eco-Frontier Co.<br />
  2. 2. Introduction of the Eco-Frontier<br />Clients<br />Government<br /> & Local authorities<br />Private companies<br />Public institutions<br />Banks<br />Insurance companies<br />Securities &<br />Asset managers<br /><ul><li>Established: January, 1995
  3. 3. Employees: 100</li></ul>Eco-Frontier Business<br /><ul><li> ESG & Carbon Rating Service
  4. 4. Green Loan Rating Service
  5. 5. ESG Engagement
  6. 6. Green Finance Consulting</li></ul>Sustainability/Green Finance<br />Low Carbon Green Growth <br />Strategy Consulting<br /><ul><li> Carbon Management Strategy
  7. 7. Corporate Sustainability Management
  8. 8. e- Sustainability Management Solution</li></ul>Energy & Environmental <br />Business Development<br /><ul><li> Biomass Business Development
  9. 9. Renewable Energy Business Development</li></ul>Carbon Business Development <br /><ul><li> CDM Project Development
  10. 10. Carbon Finance
  11. 11. Green Real Estate Fund</li></li></ul><li>Contents<br />1. Trends of the SRI in Korea<br />2. The SRI Index development in Korea<br />3. Outlook of the Korean SRI<br />
  12. 12. 1. Trends of the SRI in Korea<br />
  13. 13. Green Finance <br /><ul><li>Korea supports for Green Finance through an enactment of “ Basic Act on Low Carbon Green Growth”.
  14. 14. Funding to promote green growth</li></ul> - To establish funding to support a green economy and green industries<br /> - To develop new financial products to support a low carbon green growth<br /> - To promote private investment to build green infrastructure<br /><ul><li> Promotion the green management of companies</li></ul> - To strengthen a corporate disclosure of green management and expand financing for green companies<br /><ul><li>Introduction of the emission trading system</li></ul> - To set up a carbon market and promote active trading <br />Promotion of Green Finance(Article 28) <br />
  15. 15. Initiatives on Green Finance<br /><ul><li>Korean Financial Institutions participates in International Initiatives on Green Finance.</li></ul>End of March2010 Data<br />
  16. 16. Growth of the SRI <br /><ul><li>The number of the SRI funds has been increased.
  17. 17. The SRI market is expected to further increase since Pension Funds has begun to pay attention to SRI and Climate Change. </li></ul>Source: Korea Financial Investment Association, 2009<br />
  18. 18. Growth of the SRI <br /><ul><li>Amount composition ratio of the SRI Funds by investment region </li></ul>(as of 30 Apr 2009, KRW 1million)<br /><ul><li>Public funds (as of 30 Apr 2009, KRW 1million)</li></li></ul><li>Growth of the SRI <br /><ul><li>Composition ratio of SRI funds(public+private+Pension) by a screening strategy </li></ul>(as of 30 Apr 2009, KRW 1million)<br /><ul><li>Public funds (as of 30 Apr 2009, KRW 1million)</li></li></ul><li>2. The SRI Index development in Korea<br />
  19. 19. Overview the KRX SRI Index<br /><ul><li>As a part of “Plan for Green Growth”, the SRI Index had been developed in the first half of the 2009.
  20. 20. Considering the accessibility of information, the 330 listed companies under the 21sectors have been assessed. </li></ul>Governance<br />SRI Assessment Tool<br />Develop the SRI Index<br />KCGS’s Evaluation <br />Environmental <br />Social <br />Eco-Frontier’s Evaluation <br />
  21. 21. Assessment Method<br /><ul><li>IVA(Intangible Value Assessment)
  22. 22. Strategic scanning capability
  23. 23. Agility adaptation
  24. 24. Traditional governance concerns
  25. 25. Intellectual capital
  26. 26. Product Safety </li></ul>Strategic Governance<br />Stakeholder Capital<br /><ul><li> Partnerships with stakeholders
  27. 27. Relationships with host communities
  28. 28. Management of supply chains
  29. 29. Emerging market strategies
  30. 30. Operations at risk of human rights abuses </li></ul>Human Capital<br /><ul><li> Workplace practices, including recruitment & retention
  31. 31. Labor relations
  32. 32. Health & safety</li></ul>Environment<br /><ul><li> Risk management systems, including board & management oversight
  33. 33. Disclosure/verification
  34. 34. Efficient use of resources
  35. 35. Effective waste management & reduction
  36. 36. Climate risk assessment
  37. 37. New product development</li></li></ul><li>Assessment Results<br /><ul><li>Among 330 companies assessed, 131 companies(40%) were eligible investee companies(BBB).</li></ul>RiskMetrics Group Methodology assigns 7 ratings<br />
  38. 38. Analysis of the assessment Results<br /><ul><li> The remarkable results
  39. 39. Finance sector: Human Capital
  40. 40. Electricity & Electronics sector: Products & Service
  41. 41. Machinery sector: Environmental Opportunity </li></ul>Finance<br />Machinery<br />Electricity <br />& Electronics<br />
  42. 42. SRI Index Components<br /><ul><li>Considering market capitalization, liquidity, and Rating, SRI Index components were selected. </li></li></ul><li>SRI Index Components Distribution<br /><ul><li>The SRI Index is composed of the large portion of financial industry with the 10 components.
  43. 43. In terms of market capitalization, the electricity and electronics industry accounts for 28%.</li></li></ul><li>SRI Index Movement<br /><ul><li>As of December 16, 2009, SRIIndex is1,518.62P, 51.86% up from 1,000P.
  44. 44. The SRIIndexmoves similarly to KOSPI 200. However, it has outperformed 6.76% thanKOSPI 200 in 2009.
  45. 45. KTB Asset Management launched SRI ETF in December 2009. </li></li></ul><li>3. Outlook of the Korean SRI<br />
  46. 46. Outlook of the Korea SRI<br /><ul><li>Develop Green/Carbon Index</li></ul> - Develop ‘Green Enterprise Index’ and ‘Carbon Index’ to promote green investments<br /><ul><li>Expand on Integration of ESG and Engagement</li></ul> - Investors will consider the ESG and a carbon risk in investing decisions<br />- Financial Institutions will be engaged with companies on ESG Issues <br /><ul><li>Spotlight on the SRI and Green Finance </li></ul>- Annual joint conference of P8 Pension Group and UNEP FI. ( “Financing a Low-Carbon Growth in Asia Summit”, 16~17 June, 2010)<br /> - National Pensions Service of Korea is expected to seek progressive movements for the SRI and the Green Finance<br />
  47. 47. Thank you very much!<br />SuJeong Moonsjmoon@ecofrontier.co.kr Tel 02-3153-7801 Fax 02-3153-7703 <br />6F DMC Hi-Tech Industry Center, 1580 Sangam-dong, Mapo-gu, Seoul www.ecofrontier.co.kr<br />

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