IFC names emerging markets SRI grant winners

Zurich, 28 September: The International Finance Corporation (IFC) has named the winners of its $500,000 'Capturing Value' competition to promote analysis of emerging market companies' environmental, social, and corporate governance (ESG) performance.

Two consortia won an equal share of the prize money. One brought together credit rating firm Standard & Poor's, Crisil, an Indian rating and financial news provider, and US socially responsible investment research house KLD. The three are to initiate ESG coverage of Indian companies, with a view to constructing an ESG equity index.

The other involves UK-based environmental research organisation Trucost and CLSA Asia-Pacific Markets, one of the largest brokerage houses in Asia. CLSA will apply Trucost's methodology to the companies in the region that it covers with conventional analysis.

"Through this seed funding, we are hoping to break a chicken-and-egg situation where investors will not invest in emerging markets for lack of information, and research providers will not enter the market for lack of demand," said Rachel Kyte, director of the IFC's Environment and Social Development Department, at a dinner in Zurich on Wednesday night. "The object of the competition is to lead the market and to provide tools to a mainstream investment audience."

The IFC – which is the private sector arm of the World Bank – launched the competition in April. It is designed to "facilitate high-quality, long-term investment in emerging markets from pension funds and other investors worldwide", the IFC said.

Kyte later told EFP Online that simply running the competition had at least partly realised the IFC's objectives. "We had 25 high-quality submissions. What each of those people said to us was that setting up consortia and entering the competition had switched on a lot of lightbulbs. There are a number of business models put together that are now going forward."

The 25 candidates included research houses, rating firms and index providers. The winning proposals were selected by the IFC and a six-person panel of independent experts drawn from the UN Global Compact, asset manager First State Investments, US think-tank the World Resources Institute, the World Federation of Exchanges, the Association for Sustainable and Responsible Investment in Asia, and OnValues, a Swiss consultancy.