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June 2011: Emerging Markets ESG Analysis

Emerging Markets ESG Analysis – Exciting, exotic, mysterious? Sure, but not rocket science.

One of the oldest pieces of advice I can remember is “don’t invest in something you don’t understand”.  Since we started work on this story aimed at airing views on the opportunities and challenges of the largely uncharted waters of emerging market investment, a veritable army of, short-sellers and analysts have exposed evidence of apparent frauds and mis-reporting in China, emerging markets flagship.

Interestingly those revelations have not been without profit for those research houses like Carson Block’s Muddy Waters and Citrus, which in turn begs the questions of responsibility, how to sort the wheat from the chaff and the eternal one of belief and motive.

We talked to seasoned responsible investing head Louise O’Halloran the Executive Director of RIAA, Australasia’s responsible investing association, Sam Sicilia, Super fund, HOSTPLUS CIO, a voice of calm reason amid the excitement of emerging market must-have investment and Mark Konyn, RCM’s regional CEO in Asia, a thoughtful exponent of good business practise rather than the jargon of the latest movement or point of difference philosophy.

What is clear in this series of interviews is that education, research and asking the right questions is the starting point for intelligent investing in crossborder markets, where out of sight does not necessarily mean out of mind.

And, surprise surprise, there is no need to continue the divisive approach to good and evil where the high moral ground can defeat the purpose.

Instead, our three participants all agree that the necessary relationship building for long-term success has matured beyond the “us and them” beginnings of saints or sinners and “good business practise” is the distillation of all the various buzz words and philosophies.

The future is hello to integrated good business practice and goodbye to specialist ESG units that divide to conquer rather than win hearts and minds in the war on bad behaviour.

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