Business

China prepares for socially responsible mutual fund

“China’s First SRI To Be Issued“
China CSR
March 24, 2008

Industrial Fund Management has been approved by the China Securities Regulatory Commission to begin the first socially responsible investment product in China.

It will be issued through eight Chinese banks and other securities companies on March 28. The most prominent feature of the SRI is that it will be mainly used for investing into socially responsible listed companies.

The company may face problems initially as it attempts to delve into the murky acocunting of some companies, even some of those that are listed. And because many Chinese companies’ definitions of corporate social responsibility place emphases on charitable giving rather than true environmental sustainability or labor rights, the fund may have some surprises in the future.

Some concerns about the prospect of socially responsible investing in China include the following:

• China’s poor human rights and environmental record
• Poor transparency and disclosure
• Stock market slump

Here’s an article from a couple of weeks ago that further explains the introduction of “SRI” into China:

“China plans 1st ‘socially responsible’ mutual fund“
Environmental News Network
March 11, 2008

SHANGHAI (Reuters) – China’s Industrial Fund Management Co Ltd is planning to launch a fund investing in shares of “socially responsible” Chinese listed firms, the first mutual fund product of its kind in the country, state media said on Tuesday. The company, which earlier this month received regulatory approval to launch the fund, has not published a prospectus. But analysts expect it to target companies engaged in environmentally friendly projects.

“What’s different is that the fund will concentrate its investment on listed firms with decent performance in terms of social responsibility,” the China Securities Journal said.

….

Some analysts said the new offering from Industrial Fund Management could be a hard sell in China, in part due to a stock market slump that has hit overall mutual fund sales.

“It remains unclear whether the fund would be successful in China because most domestic investors focus on returns but not social responsibility,” said Zhou Liang, head of China research for Lipper, a Reuters company, which tracks more than 95,000 funds worldwide.

For more information about socially responsible investing, please check out these Web sites:

• ASrIA - Association for Sustainable and Responsible Investment in Asia
• SRI Asia – Specialists in Socially Responsible Investing, Indexing and Research in Asia.
• Social Investment Forum – Trade association of the U.S. social investment industry and community. Related news, research, and user-friendly member directory.
• Open SRI – Web collaborative SRI rating platform
• Green Money Journal - Newsletter that provides resources and contacts for environmentally and socially responsible investing.
  

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