CHINA / National

'Green' fund promotes development
By Iain Marlow (China Daily)
Updated: 2006-07-21 05:55

China's ongoing battle to achieve sustainable development entered a new realm this year as Bank of China ushered in the concept of investing in sustainable, long-term projects.

In February, Bank of China International Investment Managers (BOCIIM), a joint venture with Merrill Lynch, launched its Sustainable Growth Equity Fund. It wasn't until a Bangkok investment conference in late May, though, that it received international attention as the first socially responsible investment (SRI) fund in China.

But even as the international SRI community clinks glasses for their new Chinese counterparts, some experts remain hesitant. Environmentalists are concerned about vague terminology and a lack of incentives. Investment experts warn that the lack of transparency makes evaluating companies on their SRI criteria difficult, which makes the future hazy for this type of investment.

SRI a term Bank of China investment managers don't even use refers to investments that use non-economic criteria, such as environmental or social policies, to select companies for a portfolio.

"We have an evaluation system, which considers the track record of the management, the transparency of the company and their social responsibility," said Chen Jun, the assistant fund manager at BOCIIM.

Fund managers in the West rely on external third-party evaluations to determine whether a company is suitable for an SRI fund. But Chen said BOCIIM talks with management themselves and sends in-house analysts to visit factories and companies.

That makes environmentalists such as Jennifer Turner nervous. Turner, who heads the China Environment Forum at the Woodrow Wilson International Center for Scholars, said an SRI fund is a good way to get at polluting Chinese industries, but that without transparency, there is no incentive to be socially responsible, so the whole concept fails.

"In essence, you have Bank of China, a government bank, judging Chinese factories that are government-owned," said Turner, of Washington, DC.

Ideally, a mixed panel of researchers, citizens and non-governmental organizations are needed to ensure transparency.
Page: 12