Socially responsible investment is increasingly popular in Europe and the United States in recent years. Some investors attracted by the moral aspects of this approach and others are convinced that responsible companies produce better returns in the long term. Meanwhile, in Indonesia, SRI is relatively new, with only one fund manager, First State Investments Indonesia, has signed up to the United Nations Principles for Responsible Investment.

First State implemented the principles last year, while another firm is believed to be closed to coming to adopting the principles soon. President Director of First State, Legowo Kusumonegoro, was reported to have said, “The benefit is that by investing in industries that are sustainable, we’re making a good investment choice in the long run, for true investors, not for speculators.”

Legowo added,"“We’ve limited our investment in some industries such as the mining or cigarette industries, which could cause problems to the environment or are hazardous to health.”

By applying the UN principles, fund managers can have peace of mind, while investors will understand that investment is for the long run, he said.

Eko Pratomo, senior adviser at fund manager Fortis Indonesia, said his firm had not yet implemented the UN principles, although its Syariah funds follow a similar approach by limiting investments to nondestructive industries and industries that have no negative impact on the public.

Eko said Fortis had a special fund, called the Socially Responsible Investment Fund, “that has a special criteria for investment selection, such as companies conducting due diligence on their environmental impact.”

First State managed USD302 million in net assets at the end of 2009 and aims to increase that by 25 per cent by the end of this year. It currently has seven products and plans to launch an equity-based mutual fund in the first quarter of this year.