1. Value of corporate responsibility:
The investor perspective
CSR-Ukraine Event
Ulrika Hasselgren, Ethix SRI Advisors
Kyiv 31 May 2011

2. Ethix SRI Advisors
• Trusted advisor to institutional investors in the area of sustainable and responsible
investment (SRI)
• Help investors with policy development, company research and portfolio monitoring,
engagement and company dialogue, and communication
• Pioneers with norm-based screening (2000) and SRI concept for emerging markets
(2005). Established research methodologies and SRI tools
• International team from 10 countries, speaking more than 15 languages. Documented
competence within human rights, environment, labour standards, corruption.
Documented expertise of global arms industry
• Based in Stockholm, Helsinki and London, Ethix serves more than 120 investors in
Belgium, Denmark, Finland, France, Luxembourg, the Netherlands, Norway, Sweden
and the UK with estimated assets under its advice exceeding €300bn
• Private company established in 1999
CSR-Ukraine Event 31 Mayto sign UN PRI
First Nordic advisor 2011 Board member Eurosif, founding board member Dansif and Finsif, board member Swesif
at the Paris launch in 2006

3. What is SRI?
CSR-Ukraine Event 31 May 2011

4. SRI is…
406 000 000
CSR-Ukraine Event 31 May 2011

5. SRI is …
Water
ESG
Alternative UN PRI
Investment
Sustainable
Investment Best-in-class
Labour Cluster
standards munitions
Integration CSR
Human rights Ethical
investment
Positive
Exclusion Engagement Scoring UN Global
Compact
Sustainable Corporate Norm-Based
Forestry governance Environment
Tobacco & Microfinance
CSR-Ukraine Event 31 May 2011
Alcohol

6. SRI is … Sustainable and Responsible
Investment
Water
ESG
Alternative UN PRI
Investment
Sustainable
SRI brings together all of the Cluster
Labour
Best-in-class
Investment
strategies used to combine munitions
standards
investors’ financial objectivesEthical
Human rights
Integration CSR with
their concerns about environmental, investment
Positive
social and governance Scoring issues
Exclusion Engagement (ESG) UN Global
Compact
Sustainable Corporate Norm-Based
Forestry governance Environment
Tobacco & Microfinance
CSR-Ukraine Event 31 May 2011
Alcohol

7. How big is SRI?
CSR-Ukraine Event 31 May 2011

8. ”… Total SRI capital estimated
to €5tn as of Dec09 – significant
jump from €2.7tn as of Dec 07 –
a growth of 87%...”
CSR-Ukraine Event 31 May 2011

9. SRI market in Europe
Total SRI capital estimated to €5000 billion as of 31 Dec 2009
6000
5000
4000
3000
2000
1000
0
2002 2005 2007 2010
Source: Eurosif European SRI Survey 2010
CSR-Ukraine Event 31 May 2011

10. Share of capital in Europe
Total SRI capital estimated to €5000 billion as of 31 Dec 2009
”Core SRI” ”Broad SRI”
1000 3000 2828
868
2000
1514
500
986
1000
148 145
35
0 0
Norm-/ Best-in- Thematic Other Single Active Integration
values class funds positive exclusion ownership
based selection
screening
Source: Eurosif European SRI Survey 2010
CSR-Ukraine Event 31 May 2011

11. ”Core” and ”Broad” share of total / country
% of AUM
ES Integration
FR leads to large ”Broad”
IT SRI markets in
UK France, UK and
BE
Spain
PL
EU 25% 75%
NL
DK
Nordic and
SE
FI
German speaking
NO countries’ SRI markets
DE are characterized as
AT ”Core”
CH
0% 20% 40% 60% 80% 100%
”Core SRI” ”Broad SRI”
Source: Eurosif European SRI Survey 2010
CSR-Ukraine Event 31 May 2011

12. Main SRI investors
Public pension funds or reserve funds
12%
Corporate / occupational pension
funds
Religious institutions & charities
20% NGOs & foundations
Public authorities & governments
64%
0%
Universities, academics
1% 1%
2% Insurance companies & Mutuals
Source: Eurosif European SRI Survey 2010
CSR-Ukraine Event 31 May 2011

13. What is driving SRI?
CSR-Ukraine Event 31 May 2011

14. Market drivers in the next 3 years
1 2
Demand from International initiatives
institutional investors (UN PRI etc)
Drivers for
SRI demand
3 4
External pressure Demand from
(media, NGOs, unions) retail market
Source: Eurosif European SRI Survey 2010
CSR-Ukraine Event 31 May 2011

15. External pressure…
CSR-Ukraine Event 31 May 2011

16. Value vs. Values
CSR-Ukraine Event 31 May 2011

17. SRI has implications depending on approach
Illustrative example
100%
90% Left to invest!
80% Zimbabwe
Embryonic stem cell research
70%
Fast food
60% Sudan
Exploitative consumer debt
50%
Anti-christian organisations
40% Nuclear Power
Iraq
30%
Conventional weapons
20% Abortion
10% Burma
Child labour
0% Pornography
ABC weapons
CSR-Ukraine Event 31 May 2011
Alcohol
Tobacco

18. How do investors
use CR information?
CSR-Ukraine Event 31 May 2011

19. Corporate responsibility – from an
investor’s perspective
Governance and
management
Social Risks &
opportunities Environmental
dimension
dimension
Ethical dimension
CSR-Ukraine Event 31 May 2011

20. How do investors use CR information?
Example: Governance of Environmental and
Social factors
Responsibility
100%
Company
80% Sector average
60%
Reporting Policy
40%
20%
0%
Strategy Risks
CSR-Ukraine Event 31 May 2011
Targets

21. How do investors use CR information?
Example: Risk management
• Respect for Human Rights
• Respect for Civil Liberties
• Respect for Political Rights
• Discrimination Based on Race, Sex, Disability, Language, or
Social Status
• Workers Rights
• Environment
• War/Conflicts/Acts of Terrorism
• Human Rights
CSR-Ukraine Event 31 May 2011

22. How do investors use CR information?
Example: Management of GHG emissions
• Robust research is vital for companies and investors seeking to deal
effectively with the risks and opportunities presented by climate change.
• Most companies are still developing the management systems and
competencies necessary to effectively reduce their GHG emissions. This
is a critically important finding and challenges some of our assumptions
• Key conclusions:
1. Ensure that the companies in which we invest are well run. They
should have appropriate climate change governance systems and
robust risk assessment processes, and should be able to demonstrate
that they are managing and reducing their GHG emissions;
2. Work with policy makers to establish measures that provide incentives
to reduce GHG emissions.
CSR-Ukraine Event 31 May 2011

23. It’s not a manifest
for saving the planet,
it’s a tool for better
managing risk
Charles Cronin
CFA Institute Centre
for Financial Market Integrity, EMEA
CSR-Ukraine Event 31 May 2011

24. Value of corporate responsibility:
The investor perspective
“Investment in good quality management teams with
the vision, and the ability, to manage successfully the
environmental, social and governance risks and
opportunities facing their companies.”
David Gait, First State Investment
CSR-Ukraine Event 31 May 2011

25. Thank you for your attention!
ulrika.hasselgren@ethix.se
CSR-Ukraine Event 31 May 2011