We will update the report from En-cycleS (London) about the latest session they had, inviting Mr. Peter Webster as the main speaker. Peter is the Executive Director of EIRIS (Ethical Investment Research Services). Their sessions are open to everyone positive, but the reports of sessions are usually closed within the participants, so this is a rare source to know what they are doing!
The debate of the seminar focused on 1) responsible investment and EIRIS, 2) key drivers of current SRI/CSR, 3) CSR in Japan and future perspectives, which was mixed with proactively discussions from the participants.
En-Cycles October Report
Responsible Investment and EIRIS
EIRIS, which has expanded its research coverage alongside the developments in responsible investment, conducts research on environmental, social and governance issues of companies and develops tools to help clients to make their own investment decisions. EIRIS relies mainly on public information and responses to questionnaires to conduct this research.
Substantial change in the ways companies address CSR both at home and abroad has been noticed during the last 25 years. Before, companies were concerned on how they operated abroad, while at home the focus was on philanthropic activities. In addition, external stakeholders were often only interested in the list of “bad ” companies. Currently, expectations both within and outside the companies are to build win-win relationships between ESG activities and financial benefit and long-term strategies. A diverse range of issues like bribery, HIV/AIDS and nuclear energy are being recognized as important by the international society, and the impact of social evaluation on company profit has been proven.
It is widely accepted that CSR brings long-term merits to a company, but it can be a challenge to link CSR strategies to short term company profit growth. However, it has been proven that investors can contribute to improving corporate responsibility standards by holding dialogues with companies to ask them to react to various international issues. This can be seen in the example where institutional investors took part in a dialogue with pharmaceutical companies such as Pfizer and GlaxoSmithKline when Oxfam urged these companies to react to issues of prices and patents of medicine for HIV/AIDS and so forth in developing countries.
Key Drivers of Current SRI/CSR
Climate change：
Although climate change requires international strategy and action including at a political level, sufficient countermeasures have not been taken yet. It is assumed that when a proper emission trading scheme like “cap and trade” is introduced, the cost of climate change will be integrated into cooperate value. However, this system has not been fully established yet, and energy users are expected to be ignorant of the added costs regardless of a cap and trade system. Investors have the potential to integrate climate change countermeasures into the valuation of business and to encourage companies to regard it as one of the most important issues that they should react to. In addition, they may also contribute to mitigating climate change through dialogue with numerous stakeholders such as policy makers, governments, NGOs and so forth.
UN Global Compact：
Although the credibility of the initiative has been questioned at certain stages, it has been increasing its value and reliability through the addition of the principle on countering bribery and by delisting non-active signatories. It is characterized by the 10 principles which are comprised of the basic values essential for any organization or government which takes part in the international society.
UN Principles for Responsible Investment (UNPRI)：
More than 400 institutional investors have signed UNPRI, which has more than 16 trillion US dollars of assets under management and can be said to be the UN Global Compact equivalent for investors. It is clear that it has contributed to investor engagement in policy making processes, but the feasibility of implementing these principles are yet to be seen.
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