Reflecting the growing global interest in socially responsible and related investments, the United Nations Environmental Programme is preparing a database to help inform investors.
Although the U.S. leads the world in terms of assets managed using social and environmental criteria, there are strong and vibrant responsible investing industries in other countries, such as Canada, the E.U., and Australia. An international survey sponsored by the United Nations Environmental Programme (UNEP) is designed to compare the investment products from various countries around the world.
The survey, called Sustainable Investment Products, is currently in progress and will result in a database available to the public on the Internet. It will be another two months before the site is launched, after which additions and changes will be done to maintain a complete database.
"The objective of the survey is to enhance transparency in the booming socially responsible investing market," said Dr. Frank Figge, of the University of Lüneburg, Germany, who has been assigned to initiate the survey. "UNEP plans to put a database on the World Wide Web which will allow users to compare investment products in this field, with the hope that this will help to promote SRIs."
The database will include mutual funds, investment foundations, investment companies, indices, and other investment products that consider explicitly environmental or social aspects of their investments. The purpose of the database will not be to rate products, but to allow investors to make their own comparisons based on the criteria listed.
"The idea of the survey is not to make a statement on the degree of sustainability of the investment products," asserted Figge.
UNEP recognizes that the terminology in this industry varies widely across countries and cultures. What is considered socially responsible in one country may be called ethical in another, or eco-efficient in another, confusing the issue considerably for most investors. For this reason the UNEP has chosen a very broad definition of sustainable investments, leaving investors to make their own distinctions using the database.
In addition to gathering the basic financial and organizational information on each participant, the survey will collect information on the social and environmental criteria used in each product. Distinctions are made between positive, negative, and exclusionary criteria, and information is gathered on who conducts the assessment and what recognized standards are used.
Part of the survey is devoted to "engagement," or different levels of shareholder activism employed by the products, reflecting the growing impact of this role of socially responsible investments. Participants will rate their involvement in communicating with corporations, voting their proxies based on sustainability objectives, and raising sustainability issues with companies in their portfolio.
Individual and institutional investors around the world will welcome this new service, which will allow an unprecedented comparison of socially responsible investments worldwide, UNEP’s effort to give the industry a taste of it’s own medicine: transparency. But the UNEP hopes that it will benefit more than those already committed to social investing.
"UNEP believes that another major positive effect will be a spill-over to other markets," said Figge. "There are some markets that are very advanced while in other markets these investment products are almost nonexistent."