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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 …

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

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