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ESG Investing:

Opportunities in Emerging Markets

London, 12 November 2010

2www.ecpindices.com Bloomberg: ECPS <GO> Reuters: ECAPITAL

� Emerging markets have a massive growth potential for investors and this trend is here to stay

� Emerging markets growing importance in the world’s economy is attracting more and more attention to

non financial aspects from different stakeholders (regulators, investors, employees): in these markets

ESG risks and opportunities are higher

� Taking into account also non financial, ESG-related issues can help investors to pick the right names,

but you need to develop the right skills to understand country specificities

Research and rating houses focused on sustainability can provide helpful information

to be integrated into the investment decision-making process

To assess sustainability in EM you need to read between the lines


� There are factors common to emerging markets: regulation, transparency, respect of human and labour rights

� However, country specificities can reveal significant aspects to develop a more accurate analysis

Country specificities must be taken into account

Source: ECPI database, data as of October 2010. Based on a sample of 1.515 companies.

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

BRAZIL RUSSIA INDIA CHINA OECD

ESG Score (MAX, average, MIN) across countries


� Country specific issues influence the relevance of ESG for different industries

Within a country, sector specificities are crucial

ESG Score - China

23,6%

24,1%

24,1%

24,8%

24,8%

26,1%

26,3%

26,8%

28,2%

28,3%

20% 21% 22% 23% 24% 25% 26% 27% 28% 29% 30%

Consumer, Non-cyclical

Utilities

Financial

Diversified

Consumer, Cyclical

Communications

Industrial

Basic Materials

Energy

Technology

ESG Score - OECD

22,0%

29,1%

31,3%

33,3%

33,9%

35,7%

37,8%

38,3%

38,8%

43,4%

48,2%

20% 25% 30% 35% 40% 45% 50%

Diversified

Financial

Communications

Funds

Technology


Industrial

Energy

Consumer, Cyclical

Basic Materials

Utilities

ESG Score and deviation from average across sectors



Environment, social and gov.ce aspects have a different weight for companies

Social & Governance Score and deviation from average across sectors


35,5%

34,5%

33,3%

33,0%

32,7%

33,0%

29,8%

31,1%

31,5%

32,6%

23% 24% 25% 26% 27% 28% 29% 30% 31% 32% 33% 34% 35% 36%


Utilities

Consumer, Cyclical

Communications

Diversified

Energy

Basic Materials

Industrial

Financial

Technology

Environmental Score and deviation from average across sectors

23,4%

21,2%

20,6%

19,5%

19,2%

18,1%

13,8%

16,9%

17,1%

17,5%

12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25%

Financial

Diversified

Utilities


Consumer, Cyclical

Industrial

Communications

Basic Materials

Technology

Energy

Social & Gov.ce Score - OECD

48,1%

45,0%

42,9%

42,7%

41,4%

34,9%

34,3%

34,3%

31,0%

29,7%

28,5%

10% 15% 20% 25% 30% 35% 40% 45% 50%

Communications

Technology

Diversified

Financial

Industrial


Consumer, Cyclical

Energy

Basic Materials

Funds

Utilities

Environmental Score - OECD

48,4%

41,8%

41,3%

38,0%

36,6%

36,2%

34,2%

34,0%

24,0%

21,7%

13,0%

10% 15% 20% 25% 30% 35% 40% 45% 50%

Diversified

Funds

Financial

Energy

Communications

Consumer, Cyclical


Technology

Industrial

Basic Materials

Utilities

CHINA OECD


If you are able to drill-down the analysis, ESG can add value to investments

CSI ECPI China ESG 40 Equity Index, the first of the China ESG series, selects the 40 highest ESG-rated and most liquid companies of the Chinese SSE180 Corporate Governance Index.

As a joint venture between the

Shanghai Stock Exchange (SSE)

and the Shenzhen Stock

Exchange (SZSE), the China

Securities Index Company

Limited (CSI) specializes in the

creation and management of

indices and index-related

services.

CSI is responsible for the

calculation of the CSI ECPI

China ESG 40 Equity Index, as

well as its routine maintenance

and management.

About CSIAbout CSI INDEX PERFORMANCEINDEX PERFORMANCE

SOURCE: Bloomberg, data as of 29/10/2010.

ECPI is a provider of

sustainability services focused

on rating and indices since

1997.

ECPI proprietary rating

methodologies are applied to

traditional and alternative

asset classes

ECPI calculates ESG indices and

designs solutions to integrate

sustainability analysis in the

investment process. Indices are

available across all asset

classes and distributed through

all major data vendors.

ECPI is responsible for the ESG

analysis of the CSI ECPI China

ESG 40 Equity Index.

About ECPIAbout ECPI


� Emerging markets have a massive growth potential for investors (compare MSCI EM vs MSCI US and MSCI

Europe) and this trend is here to stay in the medium term

� Emerging markets growing importance in the world’s economy is attracting more and more attention to

non financial aspects from different stakeholders (regulators, investors, employees, …): in those

markets ESG risks and opportunities are higher

� Taking into account non financial, ESG-related issues can help investors to pick the right names in a

more developed market, but you need to develop the right skills to understand country specificities

Research and rating houses focused on sustainability can provide helpful information to be

integrated into the investment decision-making process

To assess sustainability in EM you need to read between the lines


Research Dept.

Milan

Piazza Diaz, 7

20123 Milan, Italy

Tel +39 02 7214 11

Fax +39 02 72141616

www.ecpindices.com

Bloomberg: ECPS <GO>

Reuters: ECAPITAL

Index Dept.

Luxembourg

5, rue Goethe

L-1637 Luxembourg

Tel +352 26 845633

Fax +352 26 845634

Disclaimer

This document has been prepared by ECP International S.A., and/or ECPI S.r.l., and/or any of their subsidiaries and affiliates, being noted that ECP International S.A., ECPI S.r.l., are entirely owned by ECPI Group S.p.a., a company organized and existing under the laws of Italy, with registered office at Via Crocefisso, 8 , 20122 Milan, Italy (the “ECPI Group Companies”) as part of their internal research activity. The information provided herein and, in particular, the data contained in this document are taken from information available to the public. All information contained herein is obtained from sources believed by it to be accurate and reliable. While the opinions and information contained in this document are based on public sources believed to be reliable and in good faith, ECPI Group Companies have not independently verified the accuracy of such public sources. Because of the possibility of human, technical or whatsoever kind of similar error, however, such information is provided “as is” without warranty of any kind and ECPI Group Companies, in particular, make no representation or warranty, whether express or implicit, as to the fairness, accuracy, timeliness, completeness, merchantability and/or fitness of any such information and opinions contained in this document. Accordingly, neither ECPI Group Companies nor any of their respective directors, managers, officers or employees shall be held liable for whatever reason (including, without limitation, liability in negligence) for any loss (including consequential loss), expense, consequential, special, incidental, direct or indirect or similar damage, whether or not advised of the possibility of such damage, in connection with the fairness, accuracy, timeliness, completeness, merchantability and/or fitness of the information and opinions contained in this document and/or arising from any use or performance of this document or its contents or otherwise arising in connection with this document.Any opinions, forecasts or estimates contained herein constitute a high-level information statement only valid as at the date of its release. There can be no assurance that the evolution of the information contained herein and/or any future events will be consistent with such opinions, forecasts or estimates. Any information herein is at any time subject to change, update or amendment subsequently to the date of this document, with no undertaking by ECPI Group Companies to notify such change, update or amendment.This document is not, nor may it be construed as to constitute a recommendation to make any kind of investment decision or an offer for sale or subscription of or a solicitation of any offer to buy or subscribe for any financial instrument. Accordingly, this document may not be used as a solicitation or an offer for sale or subscription, and any solicitation or offer shall be made only in accordance with all applicable laws and regulation, including, whenever applicable, the filing of a prospectus with the relevant authorities. ECPI Group Companies are not financial advisors subject to special authorization and thus do not provide formal financial advice in the area of investment nor perform any asset management activity. ECPI Group Companies recommend to potential investors wishing to be provided with formal financial advice in the area of investment to contact a financial advisor duly authorized by the competent regulatory authority of its country.ECPI Group Companies publish researches on a regular basis. This publication has been prepared on behalf of ECPI Group Companies solely for information purposes. All the information contained herein is copyrighted in the name of ECPI Group Companies, and none of such information may be copied or otherwise reproduced, except for personal use only, further transmitted, transferred, published, disseminated, redistributed or resold, in whole or in part, in any form or manner or by any means whatsoever, by any person without ECPI Group Companies’ prior written consent.

Contacts

Aldo Bonati

Aldo Bonati joined ECPI in 2007. He is now Head of the Rating and

Research department.

He is in charge of developing the ESG screening process and the

research methodology and to expand the sustainability concept in

different asset classes (equity, fixed income, hedge funds,

microfinance institutions) while managing the research team.

Previously he was Product manager with Citigroup and BNL GestioniAsset Management since 1999.

He holds a 4-year Economics Degree with a major in International economy from Bocconi University where he graduated in 1999. In 2007 he gained and a MSc with honors in Management of Not for profit Organizations at SDA Bocconi School of Management.

[email protected]

Mob +39 340 563 6169

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