ESG Analysis - Under Researched Companies

ESG AnalysisESG AnalysisUnder researched companiesUnder researched companies

Environmental Investment Services Asia Limited

Keith Olson, CFAEISAL 27th May 2010

2

• First and only company in Hong Kong specialising in environmental investing

• Well-managed value and growth companies in Asia with significant exposure to the environmental sector and the development of the low carbon economy

• Green Dragon Fund >3 year track record

TBLI: ESG AnalysisTBLI: ESG AnalysisAbout EISALAbout EISAL

Long/Short Equity – Thematic Long Bias

EISAL Advantage

EISAL

PERFORMANCE Primary Focus

PIONEERING Just in Asia

PROFILE Preferred Investor

PROPRIETARY In-House Research

PROFESSIONAL Experienced Team

PASSIONATE This is important

TBLI: ESG AnalysisTBLI: ESG AnalysisUnder researchedUnder researched

3EISAL

TBLI: ESG AnalysisTBLI: ESG AnalysisUnder researchedUnder researched

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“Normal” research is difficult enough

EISAL

Webpages: 111 million 1 million

Analysts: 39 1

• Not as used to dealing with investors• Corporate disclosure

“ESG” analysis is even more difficult• Not used to answering ESG questions

TBLI: ESG AnalysisTBLI: ESG AnalysisManaging expectations for Proprietary ResearchManaging expectations for Proprietary Research

5EISAL

What information do we really need?

• Electricity/water usage, CO2 emissions...


6EISAL



What questions should we ask?

• Targets, reports, officers, verification




What questions should we ask?

• Targets, reports, officers, verification

What key information is more practical to looking for?

• Commitment, best practice, momentum

• Time & manpower intensive

• Costly & not often at board level

TBLI: ESG AnalysisTBLI: ESG AnalysisEngagement with ManagementEngagement with Management

8EISAL

Few minority shareholders will ask ESG questions

• Discuss where we’re coming from...

• Discuss why it’s good for the company

TBLI: ESG AnalysisTBLI: ESG AnalysisEngagement with ManagementEngagement with Management

9EISAL

Few minority shareholders will ask ESG questions

• Discuss where we’re coming from...

• Discuss why it’s good for the company

Questions relevant to the company

• Too small for major international surveys

• ESG vs “environment”

Preferred investor & friendly shareholder

• Information exchange

• Stakeholder wealth

TBLI: ESG AnalysisTBLI: ESG AnalysisBalancing factorsBalancing factors

10EISAL

Taj Mahal – front view


11EISAL

Taj Mahal – back view


12EISAL

Disclosure of financial and ESG information

• Transparency is good for reputation

• Sensitivity to cultural differences

Momentum is fundamental

• Management needs to be engaged

• Changes need to be visible

Financials are very important

• Qualitative & quantitative

• Checks & balances

TBLI: ESG AnalysisTBLI: ESG AnalysisOther sources & Key messagesOther sources & Key messages

13EISAL

The global NGO sector now has an annual income of US$8 tr

Source: Oxford Development Abroad

– making it the world’s 8th largest economy....

Under researched companies are very different

ESG disclosure is difficult for small companies

It's the momentum & direction that counts

EISAL

Green Dragon FundGreen Dragon FundThe EISAL AdvantageThe EISAL Advantage

Keith Olson, CFAKeith Olson, [email protected]

Tel.: +852 2877 0088Tel.: +852 2877 0088

www.eisal.com

Thank you! Q&A

ESG Analysis - Under Researched Companies

Economy & Finance

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