Responsible investment index launched for Asean companies

Singapore investors are being encouraged to get on board a global trend towards responsible investing, with the launch of an index that includes five companies listed here.

A growing number of investors across the world are looking at this type of investing, according to Ms Arisa Kishigami, head of ESG (Environmental, Social and Governance) for Asia-Pacific at global index provider FTSE Russell.

They are becoming more aware of the need to respond to global risks such as environmental sustainability and climate change, she said.

"A few years ago, investors were hesitant to embrace ESG strategies due to questions on the contribution to positive investment returns," she told The Straits Times in a recent interview.

"But the interpretation has been changing such that ESG factors are now increasingly considered investment-relevant and as part of the investment process."

Ms Kishigami added that this has also been the case for the Asean market, which has been steadily gaining traction among investors.

ENHANCING UNDERSTANDING

It can also help companies to understand what investors are looking for today, especially in terms of ESG practices.

MS ARISA KISHIGAMI, head of ESG (Environmental, Social and Governance) for Asia-Pacific at global index provider FTSE Russell.

To cater to growing demand, FTSE Russell since 2001 has rolled out several ESG-focused indices with various exchange partners in Asia, including the latest FTSE4Good Asean 5 Index, which was launched last month.

Developed with the Asean Exchanges, the index comprises stocks listed in Singapore, Malaysia, Indonesia, the Philippines and Thailand. It has a net market capitalisation of US$165.15 billion (S$226 billion) as at April 29, with an annual dividend yield of 3.66 per cent.

Of the 47 constituent stocks, five are listed in Singapore: City Developments, CapitaLand, Singapore Exchange, CapitaLand Mall Trust and CapitaLand Commercial Trust.

Companies on the index have met a rigorous assessment using more than 300 indicators covering the three pillars of environmental, social and governance to achieve an overall cumulative score.

Ms Kishigami said the index aims to serve institutional investors who are interested in monitoring, supporting and investing in Asean companies that have better ESG disclosure and action. "It can also help companies to understand what investors are looking for today, especially in terms of ESG practices."

A version of this article appeared in the print edition of The Straits Times on May 23, 2016, with the headline 'Responsible investment index launched for Asean companies'. Print Edition | Subscribe