Indonesia: New eco investment index launched

Date: 10 Jun 2009

The Indonesian stock exchange has launched a new investment index based on the social and environmental performance of companies.

The SRI-KEHATI index, which is being run in partnership with the Indonesian Biodiversity Foundation, lists the 25 companies considered to best meet the criteria, and includes oil, mining and cement companies. The index is only the second of its kind in Asia, after Japan.

The criteria for the index covers environment, corporate governance, human rights, labour practices and community investment.

Not everyone was impressed. The head of research at PT Paramitra Aifa Sekuritas Pardomuan Sihombing was quoted by the Jakarta Globe as saying that he doubted the index would include the genuinely greenest firms as other factors such as company size of profitability appeared to carry more weight in the selection criteria.

On the other hand, the index is intended to raise the positive profile of commitments to social responsibility amongst the business community. It would be unlikely to fulfill the positive influencing role intended if it sought out companies with high green intentions but poor profitability, nor would this make for a very convincing investment vehicle.

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