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,
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
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.