Fund managers searching for sustainable bets

At SET Social Impact, an event hosted by the Stock Exchange of Thailand to promote ESG companies, Prinn Panitchpakdi, managing director of CLSA Securities (Thailand), said fund managers across the world were being pressured to gear their investment towards these companies. Work is underway to define how to value these companies, as financial ratios - like a price-earnings ratio - cannot apply.
More and more investors will ask how these companies generate profits, how they impact society, how they deal with customers, how they treat employees, and other related questions.
 “In the next few years, these will be integrated into investment strategies. On roadshows, there will be more questions on “how” they conduct their business,” said Prinn, who is also a member of the SET’s board of governors.
He said it is trending that fund managers are looking for companies with sustainable returns – profits for year after year, not just for a single year.
According to Prinn, the fund managers of Norway’s sovereign wealth fund are looking for energy companies that are social and environmentally responsible. Meanwhile, similar pressure is building on fund managers in Asean and amid this trend, several companies emerge.
Prinn raised some good examples in Thailand, including Buriram Sugar, Banpu and Siam Cement Group.
At Buriram Sugar, child labour on farms is prohibited. There is a school for farmers’ children and organic farming methods are promoted. At Banpu, diversification into clean energy businesses is under way, along with financial support for a social enterprise contest. At SCG, although operating in heavy industries, the company has continually grown throughout its 100-odd year history.
“P no longer stands for just profit. It also refers to people and planet. This will in the end result in financial returns. At Buriram Sugar, there is no shortage of skilled workers,” he said.
Over 20 social enterprises showcased their products and services at the event last week. They said their offerings were impacting over 1.4 million Thais.
Thais are generous, Prinn said, but the generosity should be in the DNA and it should not be limited only to donations, but eventual benefits to the underprivileged.
In the United States, to show their accountability, listed companies are required to disclose their carbon footprints. Thailand’s Securities and Exchange of Thailand is also inspired to include a similar regulation into listed companies’ disclosure.
Prinn encouraged listed companies in Thailand to show their accountability to society. On the national level, there should be a new way to measure the country’s productivity.
“What goes into the input will matter as much as GDP itself,” he concluded.