As per the GSIA 2016, Japan showcased the fastest growth in the sustainable investing market during 2014-2016, with the aggregate sustainable investment market in Japan quantified at $473.6 billion, up from $7.0 billion in 2014. A significant contributor to this was the new information provided by the Japan Sustainable Investment Forum (JSIF) on sustainable investing strategies of large institutional asset owners. Surveys by JSIF revealed corporate engagement and shareholder action to be the most dominant strategy at $289.6 billion, applying to 61 percent of SRI assets.

In February 2014, Japan introduced its very first Stewardship Code. Whilst the principles are voluntary, 201 institutional investors had adopted them as of December 2015. This was then followed by the Corporate Governance Code in June 2015. Both the codes were introduced with a vision to promote and foster engagement between investors and companies, and to open up dialogue in order to encourage companies to improve their return on equity (ROE) and to place greater emphasis on it as a key indicator of profitability and corporate governance.

Interestingly, the world’s largest pension fund, the Japanese Government Pension Investment Fund (GPIF), became a PRI signatory in September 2015 and also established a Stewardship & ESG division, in order to integrate environment, social and governance issues into its investment process effectively.

The changes in Japan’s investment industry can be attributed to a shrinking domestic market Japanese companies are seeing due to the negative demographic trends of a growing aging population which are likely to continue for years to come.

The GSIA 2016 also pointed out that during the period 2014-2016, Malaysia with 30% share in Asia (excluding Japan) is the largest SRI market in the region, as it recognizes Shariah-compliant funds as part of the SRI universe. In 2014, the Securities Commission of Malaysia introduced an SRI framework addressing the dearth of regulations and standards within the Malaysian market, and one that envisioned to serve as a benchmark for developing comprehensive standardised products that appeal to both Islamic finance and SRI markets. It also paved the way for crossovers between the various segments of the responsible finance universe – SRI, ESG and Islamic finance.

In 2006, Bursa Malaysia introduced its Corporate Responsibility framework, followed by Shariah based indices and corporate governance guidelines for listed companies in 2007. This was followed by the launch of the FTSE4Good ASEAN Index in April 2016. The index measures performance of publicly listed companies demonstrating strong ESG performance. These developments signify how Malaysia is focused on mainstreaming ESG integration.

In light of the above developments, Global Ethical Finance Forum (GEFF) 2017 will spearhead two exclusive case studies focusing on tracking the growth of responsible investment in emerging and developed markets. The sessions aim to analyse the cases of Japan and Malaysia, understand what lessons can be gleaned from them and whether their success can be replicated in other emerging and developed markets.

Across two power-packed days, GEFF 2017 will spearhead a series of sessions focusing on the massive opportunity that lies in mainstreaming ethical finance, one that requires concerted efforts to build meaningful dialogue across its three segments: Environmental, Social and Governance (ESG), Socially Responsible Investing (SRI) and Islamic/faith-based finance. The forum aims to drive thought leadership across a wide range of topics including green bonds, financial inclusion, ethical banking, amongst others, with the vision of bringing ethics to the forefront of business.

Middle East Global Advisors, a leading financial intelligence platform spearheading the agenda of sustainable and inclusive finance, will convene the second edition of the much-coveted GEFF in Edinburgh, Scotland. Based on a strategic partnership with Islamic Finance Council UK (UKIFC), the Forum will be held under the patronage of the Scottish government, supported by the UK government and will be hosted by the Royal Bank of Scotland (RBS), building upon the legacy of the inaugural Forum held in September 2015.

The theme for GEFF 2017 – “Ethical Finance: Merging Profit & Purpose”, is in line with the Forum’s aspiration to serve as a platform of convergence and collaboration across the responsible finance universe, and to forge a vision for a more inclusive and sustainable financial system.

The forum will take place on September 13-14 at the Royal Bank of Scotland (RBS)’s prestigious Conference Centre in Edinburgh, Scotland.

ALSO READ:  Scaling up impact investments to take centre stage at GEFF

GEFF to highlight the massive potential Sustainable Capitalism harbours

GEFF 2017: Key focus is merging profit and purpose

The post Analysis of responsible investment in Japan, Malaysia appeared first on International Finance.

The theme for GEFF 2017 – “Ethical Finance: Merging Profit & Purpose”, is in line with the Forum’s aspiration to serve as a platform of convergence and collaboration across the responsible finance universe, and to forge a vision for a more inclusive and sustainable financial system.

Challenging the long-held views that charitable donations are the best way to address social and environmental concerns and that market investment should solely focus on generating financial returns, impact investing focuses on making investments into companies, organizations and funds with the intention to solve social and environmental issues whilst generating a financial return. The market for impact investing, however, is one that is relatively new. However, recent years have seen collaborative efforts at the global level to spur the development of a high-end market that supports impact investing, efforts that can be seen in the growing membership of bodies like UNPRI, GIIN and other comparable organizations.

Some of the key areas impact investments focus on include economic development, financial inclusion, employment, sustainable living, agriculture and education. As per the Global Sustainable Investment Alliance 2016, presently there are USD 22.89 trillion of assets globally that are professionally managed under responsible investment strategies, demonstrating an increase of 25% since 2014. In relative terms, responsible investment now stands at 26 % of all professionally managed assets globally highlighting the increased significance of sustainable investing across global financial markets.

Interestingly, according to the World Business Council for Sustainable Investment, by 2050, the business opportunities for sustainability-focused companies are expected to be between $3 trillion and $10 trillion annually, or up to 4.5 percent of global GDP highlighting the significant market opportunity that lies in store for impact investing.

With a staggering increase in population year on year, the global demand for food, water and energy calls for innovative improvements in infrastructure to address the grim concern of over-straining resources. Evolving macro-economic trends and millennials are core contributors to the growing impact investment market. Interestingly, a survey by Morgan Stanley revealed that compared to the overall individual investor population, millennial investors are twice as likely to invest in companies or funds that target specific social or environmental outcomes with women more likely than their male counterparts to factor sustainability into investment decisions.

However, a number of obstacles stand in the way of investors achieving scale and efficiency. These include a lack of: suitable exit options, Government support for the impact investing market, appropriate capital across the risk/return spectrum, high quality investment opportunities with demonstrable track record and common standards and segmentation of the impact investing market.

Despite the many challenges it faces, impact investment is here to stay, transcending market conditions and dynamic economic outlooks. In light of the above hurdles and trends, GEFF 2017 will spearhead an exclusive panel session focusing on impact investing. The session aims to assess the performance of impact investors and the entry of large institutional investors, whilst focusing in depth on impact strategies and targeting and measuring social and environmental impact.

The session will also analyze examples of strong Government leadership to develop the impact investing market, understand ways of funding innovations in sustainable investing and understand what a responsible exit looks like.

Across two power-packed days, GEFF 2017 will spearhead a series of sessions focusing on the massive opportunity that lies in mainstreaming ethical finance, one that requires concerted efforts to build meaningful dialogue across its three segments: Environmental, Social and Governance (ESG), Socially Responsible Investing (SRI) and Islamic/faith-based finance. The forum aims to drive thought leadership across a wide range of topics including green bonds, financial inclusion, ethical banking, amongst others, with the vision of bringing ethics to the forefront of business.

The forum will take place on 13th and 14th of September at the Royal Bank of Scotland (RBS)’s prestigious Conference Centre in Edinburgh, Scotland.

ALSO READ: GEFF to highlight the massive potential Sustainable Capitalism harbours

GEFF 2017: Key focus is merging profit and purpose

The post Scaling up impact investments to take centre stage at GEFF appeared first on International Finance.

The theme for GEFF 2017 – “Ethical Finance: Merging Profit & Purpose”, is in line with the Forum’s aspiration to serve as a platform of convergence and collaboration across the responsible finance universe, and to forge a vision for a more inclusive and sustainable financial system.

The Global Financial Crisis (GFC), also considered as the apex of “unsustainable capitalism”, and the subsequent bail-out of too-big-to-fail organizations sent ripples of shock and instability throughout the world. Following the GFC, there was a call greater than ever to focus on a sustainable approach that took long-term profits into account versus the obsession with short-term profits and numbers that culminated in the crisis in the first place. Presently, the financial sector is exhibiting signs of a return to precisely the same risky behavior that led to the GFC, a finding that was echoed in the latest IMF Global Finance Stability Report.

Corporate short-termism, an obsession with short-term profits owing to frequent reporting cycles, has shown to deteriorate firms’ competitiveness, increase systematic risk and reduce the long-term potential of the entire economy. Interestingly as per a recent survey, 65% of executives and directors believed that the short-term pressure had increased over the last 5 years while 55% who worked at companies lacking a strong long-term culture also believed that their company would delay new projects in the race to hit quarterly targets even if it involved sacrificing some value (FCLT Global, 2016). To combat the short-termism in business, Sustainable Capitalism, a conceptual form of capitalism that focuses on long-term financial gains via sustainable means, gained prominence. The manifesto for Sustainable Capitalism, many believe, has been coined by noted American Nobel Peace Prize winner and environmentalist Al Gore.

A recent study by McKinsey Global Institute revealed that from 2001-2014, the revenue of long-term firms cumulatively grew on average 47% more than the revenue of other firms, and with less volatility with long-term firms also showcasing a stronger financial performance over time.

In the light of the numerous disruptive threats the financial world is facing, GEFF 2017 will spearhead an exclusive panel session focusing on the massive potential Sustainable Capitalism harbours. The session aims to assess the social and environmental implications of rehauling the current economic model, the key challenges to mainstreaming sustainable capitalism, and most importantly the key measures that would place the economy on a sustainable path. Some of these measures involve mandatory integrated reporting, ending the quarterly reporting cycle that incentivizes employees to focus on a short-term outlook and aligning compensation structures with long-term sustainable performance. Discussions at GEFF 2017 are premised on the notion that sustainability is a fiduciary issue.

The session will also delve deeper into the strong link between sustainable capitalism and responsible finance, and aim to assess how the latter can tackle growing inequality and social strife.

Across two power-packed days, GEFF 2017 will spearhead a series of sessions focusing on the massive opportunity that lies in mainstreaming ethical finance, one that requires concerted efforts to build meaningful dialogue across its three segments: Environmental, Social and Governance (ESG), Socially Responsible Investing (SRI) and Islamic/faith-based finance. The forum aims to drive thought leadership across a wide range of topics including green bonds, financial inclusion, ethical banking, amongst others, with the vision of bringing ethics to the forefront of business.

The forum will take place on 13th and 14th of September at the Royal Bank of Scotland (RBS)’s prestigious Conference Centre in Edinburgh, Scotland.

Also Read: GEFF 2017: Key focus is merging profit and purpose

The post GEFF to highlight the massive potential Sustainable Capitalism harbours appeared first on International Finance.