By Ishun P Ahmad

At least four foreign fund managers, managing about S$190 billion (RM601.84 billion) of pension funds, are coming to Malaysian shores in July to look at the investment potential of companies with excellent corporate social responsibility (CSR) practices in the country.

It is learnt that the asset managers include Hermes Asset Management (UK), Mitsubishi UFJ Financial Group (Japan), New Zealand Superannuation Fund and Mn-Services (the Netherlands).

They will be attending a three-day international CSR conference to be held from July 29 to 31 in Kuala Lumpur.

The conference, organised by OWW Consulting Sdn Bhd, Russ Consulting and EU-Malaysia Chamber of Commerce and Industry, will feature two forms of business matching opportunities for participants that are designed to promote active CSR development between companies and community groups, and to connect CSR and investor relations professionals in Malaysian firms with local and overseas socially responsible investment (SRI) funds and asset managers.   

OWW Consulting managing director Geoffrey Williams told The Malaysian Reserve that fund managers are interested in looking for new investment opportunities in Malaysian companies that have good CSR practices.   

OWW Consulting is an organisational stakeholder of the Global Reporting Initiative (GRI) and a supporter of the UN Global Compact.   

The group is the first signatory to the UN Principles for Responsible Investment (UNPRI) in Malaysia and Singapore.   

According to Williams, apart from good CSR investment opportunities in conventional sectors like automot ive, f i na ncial a nd manufacturing, the foreign funds are also interested in new CSR-related investments such as biofuel, environmentally-friendly technologies a n d "g r e e n investments" within the Clean Development Mechanism (CDM) that includes Carbon Trading Opportunities, for example.   

"Most are pension funds and they are careful about long-term returns. Given the rather sluggish returns and high volatility in Europe and the US due to the subprime overhang, they are looking to diversify their portfolios in higher return markets, which are good for long-term growth.   

"All of the funds are also members of the UNPRI and as part of their commitment to this programme, they also aim to engage local companies and fund managers to promote good CSR practices and to reward and underpin it with their investments," said Williams.   

"They will also promote international CSR standards, which in our experience, many Malaysian companies already meet," he added.   

Apart from the fund managers, international organisations including the United Nations Global Compact (New York), UNPRI (London), Global Reporting Initiative (GRI) (Amsterdam), International Labour Organisation (Jakarta), Asian Development Bank (Philippines), Association for Sustainable and Responsible Investment in Asia (ASRIA), and the World Business Council for Sustainable Development (Geneva) will also be attending the Kuala Lumpur conference.   

Williams stressed that Malaysian businesses and fund managers stand to gain by disclosing their CSR performance.   

"By highlighting the areas where they perform well, they can show that they match the ESG (Environmental, Social and Governance) criteria which SRI investors use.

"The best way for companies to do this is to work with local CSR reporting companies who are experts in international reporting standards, such as the GRI," he said.    Williams said fund managers can benefit in particular by being open to developing locally-managed investment vehicles, into which overseas investors can easily buy into.   

They can also match overseas funds in providing fund management services in the SRI space.    To do this, Williams said they will need to match local SRI research companies who are experts in international ESG standards.    Meanwhile, Williams said the size of actively- managed SRI funds is estimated to be around US$4 trillion.

"If Malaysian companies can attract just US$1 for every US$1,000 of these funds, they will be able to attract new investments of roughly four or five times the current value of the Employees Provident Fund (EPF)," said Williams.

He said CSR in Malaysia is actually very good, adding that OWW Consulting is very positive about CSR here. It believes Malaysia is a leader for CSR practices in the region.

"In our experience of working with Malaysian companies we see truly excellent examples of good CSR (practices) every day... Our research shows that Malaysian companies are as good on average as their peers in Asia Pacific and in many cases they are well above average.    "Outside of Australia, Malaysian companies are amongst the leaders," said Williams.

Reproduced with permission by Malaysian Reserve