Thailand Sustainability Investment: SET's initiative towards sustainable growth
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SUSTAINABLE or responsible investment has become one of the key themes in an investment community striving for long-term and stable returns.
In particular, such investors not only are looking at the financial performance of listed companies, but are also considering whether these companies operate in an eco-friendly fashion, with a focus on social responsibility, and adopt good corporate-governance practices.
In other words, they consider the environmental, social and governance (ESG) aspects of the companies they want to invest in, as well.
At the international level, the Dow Jones Sustainability Index (DJSI) is accepted as a benchmark for global investment of listed companies with leading performance and outstanding ESG practices.
The DJSI was established and is managed by S&P Dow Jones Indices jointly with RobecoSAM, a specialist in sustainable investment.
The good news is that there are 10 large Thai listed companies – Banpu, Central Pattana, IRPC, Minor International, PTT, PTT Exploration and Production, PTT Global Chemical, Siam Cement, Thai Oil and Thai Union Frozen Products – which excel in ESG performance and have been selected in the DJSI emerging markets index.
The sustainable-investment approach has been growing in popularity significantly in capital markets around the world. A recent research study titled the “2014 Global Sustainable Investment Review”, conducted by the Global Sustainable Investment Alliance – a collaboration of membership-based sustainable-investment organisations around the world – showed that the total global asset size of sustainable investment last year was worth US$21.358 trillion (Bt770 trillion), an increase of 61 per cent from 2012.
In order to promote sustainable investment, the Stock Exchange of Thailand has recently initiated the “Thailand Sustainability Investment” project.
Under this initiative, the SET – jointly with the Securities and Exchange Commission, the Association of Investment Management Companies, the Association of Thai Securities Companies, the Thai Listed Companies Association, the Thai Institute of Directors, and the For Khonthai Foundation – has created an ESG benchmark in line with international best practices. Such a benchmark is then used as a tool to search for listed stocks with outstanding ESG performance.
It is expected that the final list of stocks in the Thailand Sustainability Investment project will be announced on October 15.
The Thailand Sustainability Investment initiative is expected to catalyse sustainable development in Thailand, in addition to other SET measures.
Significantly, it will enhance the visibility of Thai listed companies with good ESG performance among the international and local investment communities, while serving as a guideline for companies’ implementation towards sustainability.
Rinjai Chakornpipat is senior vice president, Group Head Product Business & Development, the Stock Exchange of Thailand
