By John Aglionby in Jakarta
Published: June 8 2009 15:39 | Last updated: June 8 2009 15:39
Indonesian Stock Exchange on Monday launched a sustainable and
responsible investment (SRI) index with a leading environmental
organisation to raise investor awareness of companies’ environmental
and social track records.
People involved in the SRI-KEHATI
index, which lists 25 companies, say it is the first single nation
sustainability index in Asia outside Japan.
“We have to
internalise the environment into the economy,” said Emil Salim, the
former environment minister who founded KEHATI, the Indonesian
Biodiversity Foundation. “We need to raise awareness that there is more
to business than just profit.”
Market players believe it will take time to gain relevance because few Indonesians care about sustainability issues.
begin with, it will mean more to the listed companies than investors,”
said Ida Malik of Bapindo Bumi Sekuritas. “It might have more impact in
the mid-to-long term because we have so many mining and resources
companies that dominate the market.”
Three mining, palm oil and two cement companies are in the index.
foreign bank analyst said it would only become a benchmark if enough
capital tracks it. “The exchange should do some arm-twisting and
marketing to make sure it stays relevant,” he said.
companies qualify that have assets of more than Rp1,000bn ($100m), a
free float of more than 10 per cent of the shares and a positive price
earning ratio. Exchange officials said 106 companies currently meet the
criteria. The index will be reviewed every February and August.
are judged in six areas: the environment, community involvement, good
corporate governance, respect for human rights, business behaviour and
Geoffrey Williams, of OWW Consulting, who
compiled the index, admitted the scores are lower than on comparable
indexes in Europe or the US. “But part of the process is to get people
interested in companies’ non-financial performance,” he said.
couldn’t consider many companies because they’d never been asked to
provide this information before. I expect that now they know about this
index, they’ll get the information together.”