Lessons Learned:
The Emerging Markets
Disclosure Project,
2008 – 2012

BOSTON COMMONA S S E T M A N AG E M E N T, L L C

ACKNOWLEDGMENTS
The Emerging Markets Disclosure Project (EMDP), an initiative of the US SIF Foundation, brought together
partners from around the globe in a collaboration aimed at improving sustainability disclosure in emerging
markets. Over the five years of the project, the participants published four original research reports, createdcountry teams in Brazil, Indonesia, South Africa and South Korea, engaged 72 companies, and achieved theirgoal of advancing sustainability reporting in the emerging markets.
The majority of the EMDP’s work was done through voluntary efforts of the participating organizations.
All are mentioned in the report, but two individuals stand out for their leadership on this project: Boston
Common Asset Management Managing Director Lauren Compere and Calvert Investments Senior
Sustainability Analyst and Manager, Index, Mike Lombardo. The two co-chaired the EMDP’s steeringcommittee; Compere also co-chaired the South Korea team and Lombardo the South Africa team.
Recognition also needs to be given to UN-backed Principles for Responsible Investment (PRI) Secretariat
Head of Investor Engagement Valeria Piani, who participated on the steering committee too and helped coordinate the Brazil and Indonesia teams. HSBC SRI Analyst Cinthia Gaban, PREVI Strategic Planning Manager Rafael Castro, PRI Secretariat staff Marcela Zonis, Camila Yamahaki and Arleta Majoch, IndonesiaWise CEO Amol
Titus, Korea CSR Research Service (KOCSR) Executive Director Joowon Park, and MN Services Responsible
Investment Advisor Faryda Lindeman took leading roles on country teams as well and with Compere, Lombardo
and Piani made significant contributions to this report.
Assistant Director of Operations & Development Sylvia Panek with other US SIF staff provided administrative,
research and technical support to the project, including editorial input for this report. PRI Secretariat staff lent
technical and coordinative assistance, as did the Global Reporting Initiative (GRI) and the International
Finance Corporation (IFC). Finally, the EMDP thanks the individual country teams in Brazil, Indonesia,
South Africa and South Korea for their tremendous contributions.
The EMDP project partners hope that this retrospective will help encourage others to pursue greater corporatetransparency and sustainability disclosure in emerging markets.
Sustainable Investments Institute (Si2) Cofounder and Deputy Director Peter DeSimone authored this report,
which was produced with financial support from the following sponsors:

About the Publisher

The US SIF Foundation, a non-profit 501(c)(3) organization, supports theeducational and research activities of US SIF: The Forum for Sustainable
and Responsible Investment (US SIF). US SIF is the US membershipassociation for professionals, firms, institutions and organizations engaged
in sustainable and responsible investing (SRI). US SIF and its members
advance investment practices that consider environmental, social and corporate governance criteria to generate
long-term competitive financial returns and positive societal impact. US SIF’s members include investment
management and advisory firms, mutual fund companies, research firms, financial planners and advisors,
broker-dealers, banks, credit unions, community development organizations, non-profit associations, andpension funds, foundations and other asset owners.
© US SIF Foundation, 2012

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 2012

B

TABLE OF CONTENTS
Executive Summary................................................................................................................................. 1
EMDP Milestones............................................................................................................................... 2
Comments from EMDP Lead Partners............................................................................................... 2
Global Overview....................................................................................................................................... 3
EMDP by Numbers............................................................................................................................. 3
Table: Summary of 2008 Report Findings......................................................................................... 4
Chart: Number of Firms Reporting ESG Information by Document Type......................................... 5
Background on the Global Reporting Initiative.................................................................................. 6
Brazil....................................................................................................................................................... 10
EMDP Brazil Team by Numbers....................................................................................................... 10
Investor Signatories Supporting the EMDP Brazil Team.................................................................. 11
Chart: Round One Scoring.............................................................................................................. 12
Chart: Round Two Scoring.............................................................................................................. 13
Lessons Learned in Brazil................................................................................................................ 14
Indonesia................................................................................................................................................ 16
EMDP Indonesia Team by Numbers................................................................................................. 16
EMDP Indonesia Team Target Stakeholders for Dialogue................................................................ 18
Investor Views of ESG Disclosure in Indonesia................................................................................ 19
Indonesia in Perspective.................................................................................................................. 20
South Africa........................................................................................................................................... 22
EMDP South Africa Team by Numbers............................................................................................ 22
The JSE SRI Index, an Emerging Markets Pioneer.......................................................................... 23
South Africa’s Sustainability Sensibilities......................................................................................... 24
South Korea........................................................................................................................................... 27
EMDP South Korea Team by Numbers............................................................................................ 27
Chart: South Korea Scorecard, 2010 – 2011................................................................................. 28
South Korea on the Cusp of Change............................................................................................... 30
Appendices............................................................................................................................................ 32
A. Investor Statement on Sustainability Reporting in Emerging Markets......................................... 33
B. EMDP Scorecard......................................................................................................................... 35
C. Resources.................................................................................................................................... 36

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 2012CEXECUTIVE SUMMARY

I

n 2008, members of the International Working Group (IWG) of the US SIF Foundation identified
a need for more comparable environmental, social and governance (ESG) data from emerging
market companies. The lack of information was inhibiting the ability of sustainable and responsible
investors (SRI) to assess emerging market firms and offer SRI products.
To achieve this aim, the IWG created the Emerging Markets Disclosure Project (EMDP). The project’s
participants would work toward increasing sustainability reporting among emerging market companies
and improving the quality and usefulness of the metrics, data and information offered by thesecompanies through research and engagement activities. The project also sought to increasesustainable investment activities and ESG research products covering these markets, as well as
to bolster transparency and corporate performance on key sustainability factors.
Building on expertise from sustainable and responsible investment (SRI) funds and researchorganizations within IWG, the group reached out to the United Nations (UN)-backed Principles for
Responsible Investment (PRI) Secretariat, the Global Reporting Initiative (GRI) and the International
Finance Corporation (IFC) for additional
coordination and technical assistance.
EMDP MILESTONESOver five years, the EMDP launchedthree work streams: baseline research,• Project inception
investor support, and corporate• Debut of Sustainability Reporting in Emerging
Markets: An analysis of the sustainability
engagement. Each had a criticalreporting in selected sectors of sevenfunction in supporting the project’s
emerging market countries
success. Research guided the EMDP
• Launch of investor statement
in assessing needs and selecting
countries, and the EMDP produced• Publication of A Review of ESG Practices
in Large Emerging Market Companies;
four original research reports to
Corporate Sustainability Disclosure in Emerging support the group’s activities. Investor
Markets and Emerging Markets Investor Survey
support demonstrated broad market
Report: An analysis of responsible investment
endorsement of the project’s aims
in emerging markets
and was instrumental in helping to• Creation of country teams in Brazil,
get attention from companies. By
Indonesia, South Africa and South Korea• Unveiling of EMDP Scorecard
2012, 55 investors with more than
$1 trillion in assets under management,• Renewal of investor support
including a sizeable emerging markets• Start of engagement activities by country
contingent, signed onto a statement
teams• Posting of public reports from Indonesia andsupporting the project’s objectives,
South Korea teams
along with 26 research and civil society
organizations. Finally, this project’s• Continuation of engagement efforts and quarcorporate engagement activities
terly progress reports by country teams
yielded positive changes that will
• Issuing of second Indonesia public reportcontinue to have an impact in Brazil,• Conclusion of engagement efforts
Indonesia, South Africa and South

2008
2009

2010
2011
2012

• Project close

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 20121

Comments from EMDP Partners
Korea. To date, the EMDP has engaged 72 companies inthese four markets. Overall, more than 51 organizations
from both developed and emerging market countries
participated in the EMDP, and this collaboration was oneof the keys to the project’s success.
SUMMARY OF FINDINGS: In reflecting on theirexperiences, the EMDP country teams noted thefollowing common themes:•	Collaboration between international partners, local
investors and organizations with knowledge of, language
expertise in, and strong contacts in the target markets
proved to be effective model for engagement.
•	Knowledge of sustainability reporting practices andinternational norms varied widely in the markets, as
did awareness of how investors use ESG data inconstructing portfolios and choosing investments.
It is critical to continue education about these issues.
•	While many emerging market companies report somekind of ESG information, few use international standards
such as the Global Reporting Initiative’s guidelines, issuecomparable, year-on-year metrics, or offer in-depth,
useful information on sustainability risks such as climatechange, water use and human rights. Of the markets
studied, Brazil and South Africa are clear leaders inthese areas.

Lisa Woll, CEO, US SIF Foundation
US SIF Foundation was pleased to be thesecretariat for the EMDP for the past five years.
Corporate sustainability disclosure is one of US
SIF’s top issues, so this project was a natural fit for
us. Additionally, our members saw tremendous
value in the project, and many participated actively
in the EMDP. As our members’ product offerings
expand into emerging market equities, the typeof transparency the EMDP sought to promote will
become even more critical. The gains the projectmade in persuading companies in emerging
markets to report according to internationallyrecognized standards, including the GRI, will likely
have ripple effects for years to come.
Ernst Ligteringen, Chief Executive, Global
Reporting Initiative (GRI)
Transparency in emerging markets is key to asustainable global economy. GRI congratulates the
EMDP and its partners on their groundbreaking
work over the past five years. The continuing
growth and success of sustainability reporting,and use of the GRI Guidelines, depends on an
increasing number of companies and organizations
around the world realizing the value of sustainability
disclosure. The EMDP’s efforts to promote the
GRI Reporting Framework in emerging markets
contributes to this increase, supporting GRI’s
mission to make sustainability reporting standardpractice. Through the education efforts and many
corporate engagements conducted by the EMDP
partners, the project paves the way for improved
transparency and a sustainable economy in theyears to come.

Dr. James Gifford, Executive Director,
Principles for Responsible Investment (PRI)
Secretariat
The PRI Initiative was created to help investors•	The use of scorecards and comparable peer data
adopt and implement the six Principles forresponsible investment, and Principle three states
on companies was effective in bringing lagging
that signatories should seek appropriate disclosure
performers to the negotiating table, and the information
on ESG issues by the entities in which they invest.
proved extremely useful to team members in hostingResponsible long-term investors cannot makeproductive meetings with companies.
prudent investment decisions unless they havehigh-quality information on companies’ exposure•	As in developed markets, investor relations departments
to these issues and the quality of their responses tothem. Therefore, the activities of the EMDP wereand senior management at times appeared detacheddirectly aligned with our signatories’ aspirations,from internal sustainability efforts and need to be brought
and we were happy to support this project and help
into the process to yield meaningful, long-term results.
raise awareness about its goals, achievements andfindings. Many PRI signatories participated in the
ORGANIZATION OF THIS REPORT: This report is organizedproject and many more will continue the mission
into five sections, including this executive summary. Theof the EMDP in emerging markets in future as theyseek greater transparency from the companies infollowing four chapters provide more in-depth information
which they invest in and gather the information
on each of the country teams and their activities andthey need to integrate sustainability factors into thefindings. An appendix contains key documents andinvestment process. With much better informationreference materials.
on ESG issues now being disclosed by Brazilian
companies in particular as a result of the project,
the PRI’s Brazilian network can now undertake new
Lessons Learned: The Emerging engagements
Markets Disclosure
Project,
2008 – 2012
2
with local
companies
around how
they are managing these issues.

•	Local exchange listing and regulatory requirements werethe most important drivers of sustainability reporting.

GLOBAL OVERVIEW

S

parked by demands from the sustainable andresponsible investment (SRI) community for research andproducts covering emerging markets, the Emerging Markets
Disclosure Project (EMDP) was launched in 2008. EMDP, aproject of the International Working Group (IWG), was basedat the US SIF Foundation and led by US SIF members Boston
Common Asset Management and Calvert Investments.
The United Nations (UN)-backed Principles of Responsible
Investment (PRI) Secretariat and the International FinanceCorporation (IFC) provided coordinative and technicalsupport for the project.

EMDP BY NUMBERS

51

Participants

72 Companies Engaged
Statement
81 Investor
Signatories

When the project started, global providers of ESG data largely did not offer information aboutcompanies listed in emerging markets, and research organizations generally did not have the capacity
to deliver these types of services to investors, at least not on a global scale that offered comparability
between markets. Yet, investors were beginning to offer SRI funds with emerging markets equities,
and many more were exploring the creation of these investment vehicles.
The EMDP sought to address these challenges through three types of activities or work streams:
market research, investor support and corporate engagement. The participants researchedcompanies in a broad array of sectors in 11 emerging markets widely held by global investors toascertain general trends, gather data for selecting markets for engagement activities, and offer
country teams a baseline for evaluating and selecting companies for dialogues, as well as formeasuring progress. In the area of investor support, the project partners crafted an investor sign-on
letter and launched a campaign to attract signatories that was later leveraged in engagement withcompanies once the country teams were formed. The three strategies are described below.
MARKET RESEARCH: EMDP participants collected benchmark data on sustainability reporting in theemerging markets that later helped the project select markets and guide country teams in developing
strategies for further research, corporate outreach and engagement. The baseline research for the
project was conducted in coordination with US SIF members KLD (now part of MSCI) and EIRIS,
as well as the United Nations Conference on Trade and Development (UNCTAD), which led to the
publication of three reports, one in 2008 and two in 2009. All three concluded that while a significant
number of emerging market companies had begun to report on ESG issues, the practice was not
yet widespread, and most reports did not conform to a global standard, such as the GRI reporting
guidelines. However, Brazil and South Africa performed well in all three assessments with high rates
of reporting companies using GRI and offering data on key ESG issues.
The 2008 KLD report, Sustainability Reporting in Emerging Markets: An analysis of the sustainability

reporting in selected sectors of seven emerging market countries, examined the levels of sustainability
reporting at 75 emerging market companies in seven countries—Brazil, China, India, Russia, South
Africa, South Korea and Taiwan—across three industries—energy (21 companies), materials, metals
and mining (28 companies); and telecommunications (26 companies). Researchers reviewed
Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 20123

SUMMARY OF 2008 REPORT FINDINGS
Disclosure Question
Overall Brazil China
India
Russia						South
Africa

South
Korea

TaiwanSector Leader

General CSR Disclosure

87%

92%

75%

92%

83%

100%

82%

88%

Energy (90%)

Separate CSR Section

81%

92%

75%

92%

75%

100%

82%

50%

Energy (86%)

CSR Report

51%

67%

42%

33%

67%

100%

36%

13%

Energy (67%)

GRI Reference

27%

17%

17%

17%

25%

88%

36%

0%

Materials (32%)

Benchmarks and Goals

39%

25%

33%

17%

58%

88%

36%

25%

Energy (52%)

Key:= Best= Above Average= Below Average= Worstdisclosure in five areas: general public disclosure of sustainability issues; a dedicated sustainability
area within the website or annual report; existence of a stand-alone sustainability report; reference to
the Global Reporting Initiative (GRI) framework in reporting sustainability data; and the existence ofsustainability goals and benchmarks.
The report found that 87 percent offered at least some sustainability disclosure, and 81 percent
had separate sections of their website or annual report dedicated to sustainability issues—positive
signs for engaging companies. (See table above). At the same time, only 27 percent of the surveyed
firms made use of GRI, an area for improvement targeted by the EMDP because the use of GRI
facilitates data gathering by SRI research providers and funds, as well as comparability of data andbenchmarking. By country, South Africa emerged as the clear leader in all categories with China andTaiwan exhibiting some of the lowest levels of disclosure. By industry, the energy sector led with highmarks in four of the five categories, followed by materials in one. The report also found that the
telecommunications sector trailed with no best showings in any of the criteria.
The 2009 EIRIS report, A Review of ESG Practices in Large Emerging Market Companies, analyzed 40

leading emerging market companies—the top four by market capitalization—in 10 emerging
markets—Brazil, China, India, Indonesia, Israel, Malaysia, Mexico, Russia, South Africa and South
Korea. EIRIS staff, with assistance from employees at Ecodes, Greeneye and KOCSR, assessedcompanies’ publicly available information, including annual reports, sustainability reports andwebsites, to see the extent of their disclosure on:• Environment—general environmental issues, climate change and biodiversity.
• Social—human rights, supply chain issues, and employee health and safety.
• Governance—board practices and ethics.
The report found that:•	Companies scored much better in environmental areas than in social or governance, with somereaching transparency on a par with environmental leaders in developed countries with regards toenvironmental performance and systems. Wide adoption of environmental management systems
such as ISO 14001, especially in Asian countries, buoyed results.
Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 20124•	Companies in the extractives and other sectors with higher sustainability impacts outperformed
others on issues such as health and safety and environment. Nevertheless, the emerging market
companies overall lagged on climate change and other critical environmental disclosures.
•	Public disclosure of key governance issues was high, including director remuneration (33 out of
40 companies) and the separation of the roles of chair and CEO (28 out of 40 companies).
• 	The selected South African and Brazilian companies stood out overall as consistently having thehighest assessments among the companies sampled. These countries also developed some of
the first responsible investment indices in emerging markets, acknowledging investor interest in
ESG performance.
The 2009 UNCTAD-US SIF Foundation report, Corporate Sustainability Disclosure in Emerging

Markets, the third in the series of baseline studies, covered the top 10 companies by market
capitalization in 10 of the world’s largest emerging markets—Brazil, China, India, Indonesia, Israel,
Malaysia, Mexico, Russia, South Africa and South Korea—for a total universe of 100 companies.
The report analyzed reporting practices on five environmental, five social and 10 corporate governanceindicators for a total of 20. In line with the other studies, the report found that 96 percent of thecompanies reported on at least one ESG factor analyzed in the report, but only 14 of the 100 declared
reporting in accordance with the GRI’s guidelines, with a mere 20 making reference to the GRI. In
addition, of the 28 companies listed as signatories to the United Nations Global Compact, only
18 (64 percent) produced a Communication on Progress (COP) and/or a GRI report in compliancewith the Compact’s reporting requirements. Other key findings of the report include:•	Descriptions of governance structures and board committees was the most commonly reported
indicator (96 percent) followed by data on employee wages and benefits (90 percent).
•	Of the three categories (environmental, social and governance), environmental data was the least
likely to be reported (30.6 percent on average), in contrast with the EIRIS report.
•	Of the environmental issues assessed, energy use was the most disclosed item (39 percent) andranked 13 out of the 20 indicators, followed by water use (34 percent). Climate-related data placeda distant third (30 percent) among environmental issues and 15th overall.

NUMBER OF FIRMS REPORTING ESG INFORMATION BY DOCUMENT TYPE
100%
80%

CSR Section in
Annual Report

60%

Separate CSR Report40%

Company Website

20%
0%

No Explicit CSR
Information
Brazil China
India Indonesia Israel Malaysia Mexico Russia									SouthAfrica

South
Korea

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 2012

5

The report’s major country-specific findings included:•	Companies from South Africa exhibited the best overall
transparency practices, while firms from China, India,
Indonesia and Mexico lagged.
• South Africa was the only country with all of its
companies in the study’s universe reporting some form of
ESG data, while India had the highest rate (40 percent) ofcompanies disclosing no form of ESG information.
•	Companies from Brazil and South Africa were among
the most likely to issue reports using the GRI’s
guidelines; both countries had five firms issuing reports.
•	Companies from Malaysia, Mexico and South Korea
demonstrated high rates of at least someform of sustainability reporting, albeit more shallow thancounterparts in Brazil and South Africa. (See page 5.)
INVESTOR SUPPORT: As part of the second work stream,

EMDP participants created a sign-on statement forinvestors to declare support for the EMDP’s activities,
including encouraging emerging market companies to issue
sustainability reports using the Global Reporting Initiative’s
guidelines. The EMDP investment statement affirmed that
corporate disclosure of ESG data helps investors mitigate
portfolio risk and determine which companies are best
positioned to deliver strong long-term investment
performance. The statement also linked sustainability
performance with the quality of overall corporate
management, as well as the best hedge against increasing
regulatory challenges on ESG issues. In particular, thesignatories to the statement encouraged companies toenhance transparency by:•	Providing regularly updated ESG data in financial reports
or in specialized sustainability reports, focusing on material business risks and opportunities.
•	Setting clear sustainability goals and disclosing progress
towards meeting targets.
•	Using the Global Reporting Initiative (GRI) framework in
preparing reports.
•	Continually improving reporting based on feedback
from key stakeholders, such as investors, employees,
customers, and relevant community and civilsociety groups.

Background on the
Global Reporting Initiative (GRI)The GRI, an international organization with
headquarters in Amsterdam, is the mostcommonly used framework by companies andother organizations to produce sustainability
reports. GRI started as a project of the Ceres
coalition in Boston in 1997; after the United
Nations Environmental Program (UNEP)
joined the initiative as a partner in 1999, GRI
released its first set of reporting guidelines.
The organization then began a global outreachprogram to recruit additional supporters
and established itself as an independent
institution in 2001; it moved to Amsterdam
in 2002 and released a new set of reporting
guidelines that year. Two years later, GRI
undertook a comprehensive two-year
consultation process about revisions,involving about 4,000 stakeholders aroundthe world. The resulting third-generation
framework, the current “G3” Guidelines,
was launched in 2006.
The central touchstone for the latest “G3”
iteration of GRI reporting guidance is its setof 49 “core” and 30 “additional” indicators—
a total which has been cut down from
110 indicators in the 2002 version. The
indicators cover three broad areas—economic,
environmental and social, but the latter
category is divided into four subcategories—
labor practices, human rights, society andproduct responsibility. Each indicator has
associated protocols that provide advice on
how to make disclosures.
An interim update to the “G3” guidelines,
version 3.1, was released on March 23, 2011,
alongside a new technical protocol designed
to help organizations produce reports moreeasily. The update includes expanded
guidance for reporting organizations onhuman rights, gender issues and local
community performance. Since the releaseof the “G3” Guidelines, GRI also has beenworking on specialized sector supplements
to help tailor the guidelines for companies
operating in specific industries and make thereporting more robust and relevant. The GRI is
working on a fourth iteration, the “G4,” which
it plans to unveil in 2013 after a broad consultation process.

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 2012

6

The EMDP launched the sign-on statement in June 2008 and conducted a follow-up campaign togain additional signatories in March 2010. By the close of the project, 55 investors with more than
$1 trillion in assets under management, including a large contingent from emerging markets, signed
onto the statement. The world’s largest ESG research providers, as well as a long list of tradeassociations and civil society organizations (an additional 26 signatories) also endorsed the statement.
This helped country teams get the attention of companies. (See Appendix A for the full statement andlist of signatories.)
INVESTOR SURVEY: The EMDP also distributed a survey to PRI signatories, US SIF members andother global partners in 2009 to measure the level of investment in emerging markets by sustainable
and responsible investors and the ESG issues that most interested them. Lead author EIRIS and other
EMDP partners debuted the resulting report, Emerging Markets Investor Survey Report: An analysis of
responsible investment in emerging markets, that same year. It found that seven out of 10 major asset
managers and institutional investors representing $130 billion of assets cited lack of ESG disclosure as
the key challenge to investing in emerging markets, affirming the EMDP’s assumptions. Survey
respondents, however, commended two emerging market countries—Brazil and South Africa—for
having made the most progress towards greater ESG disclosure. And, Brazil was the top country
allocation for SRI investors followed by China, India, Mexico and South Korea. The investors citednational ESG disclosure regulations and local exchange listing requirements as best practices thatshould be encouraged in all markets, a finding supported by the experiences of the EMDP country
teams described later in this report.
ENGAGEMENT: The project assessed many factors in deciding on focus countries:• Holdings of project participants.
•	The availability of local organizations with international investor and ESG research partners willing toengage companies.
• The prevalence of sustainability reporting in the market.
• Geographic diversity.
While other countries including China, India, Russia and Vietnam were evaluated as potential areasof interest—with some limited exploratory activities in each—the EMDP decided to set up country
teams in Brazil, Indonesia, South Africa and South Korea. The mix included markets of varying sizeand geographic location—spanning three continents, as well as maturation in adopting sustainability
reporting practices. Both Brazil and South Africa had widespread reporting. Additionally, Brazil
had regulatory requirements on sustainability disclosure, and South Africa had exchange listing
requirements for ESG reporting. At the same time, companies in Indonesia and South Korea wereon the cusp of more robust sustainability reporting. The diversity of reporting offered the EMDP
valuable lessons and opportunities for cross-fertilization of good practices and strategies.
The EMDP set up country teams in the four markets, each with investor leads and a mix of local
and international representatives, and the teams created project plans for the three work streams:
company research, investor outreach and corporate engagement. To aid the teams in evaluatingcompanies, as well as to measure improvements and the effectiveness of engagement efforts, theEMDP created a scorecard. (See Appendix B.) The scorecard allocated a maximum of 100 points tocompanies in five areas: the environment, social issues, corporate governance, general disclosure,

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 20127

and country-specific metrics, which local teams could tailor to include specific indicators critical tosustainability in their local market, such as HIV/Aids policies in South Africa. Each of the five pillars
received 20 points. In the end, the teams took different approaches on scoring and engaging
companies based on the strengths of team members and local market dynamics:• Brazil cast the widest net, leveraging extensive in-country and global partner support to write
to more than 102 companies and engage in depth with a smaller group of those not adopting the
GRI standard.
• Indonesia concentrated on building institutional and broad market support forsustainability reporting.
• South Africa, given the widespread adoption of GRI reporting already in the country, focused on
the poorest performers in the market in order to maximize the potential gains of the project.
• South Korea chose a hybrid approach, regularly scoring a core set of companies, engaging as
many of them as possible, and measuring progress closely.
SUCCESSES: All of the teams can point to major achievements as a result of their engagement efforts.

For example:•	The Brazil country team contacted 102 companies and engaged 17 directly to encourage them toimprove their sustainability reporting. During the engagement meetings, two companies informed
investors that they had just published a GRI report, while seven confirmed that they had plans
to issue one in 2012 or 2013. Eight others are still committed to discussing the prospects ofsustainability reporting using GRI guidelines.
•	The team in Indonesia convinced a listed polyester and petrochemicals company, Indorama
Synthetics, to learn more about ESG best practices and helped the firm identify and focus on
several key sustainability issues: energy efficiency, waste treatment and corporate governance.
•	The South Africa team won reforms from Aspen Pharmacare Holdings¸ Naspers, Sasol, Shoprite
Holdings, Steinhoff International and Tiger Brands, including improvements in sustainability
reporting and policies.
•	In South Korea, the local EMDP team made steady progress on reporting with all 15 companies it
engaged, including Hynix, LG Electronics, Samsung and Shinhan Financial Group.
MAJOR FINDINGS: The EMDP participants shared several common themes and conclusions.

• Cooperation between international and local partners played significant roles in shaping thecountry team’s activities and results. It was effective for international investors and organizations
with larger asset pools to work with local partners that had knowledge of and contacts in thetarget market, as well as language expertise. This was born out in each of the countries and wasmost pronounced in Brazil and South Korea, where international investors joined participants insigning onto engagement letters sent to companies encouraging them to improve sustainability
disclosure practices.

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 20128• Knowledge of sustainability reporting practices and international norms varied widely in themarkets, as did awareness of how investors use ESG data in constructing portfolios and 
choosing investments. At the same time, companies responded positively to suggestions from
EMDP participants once they had a better understanding of how sustainability information could
drive corporate performance and attract investors. This finding also validated the many education
activities the EMDP participants conducted during the project and the need for more. The Brazil
and Indonesia teams spent considerable time and resources organizing local events that proved
popular and yielded dividends in engagement activities. Both teams reported positive feedback
from participating companies and a greater success rate in persuading companies to enter
dialogues on ESG disclosure and performance issues as a result.
• While many emerging market companies report some ESG information, few use international
standards such as the Global Reporting Initiative’s guidelines, issue comparable, year-onyear metrics, or offer in-depth, relevant information on sustainability risks such as climatechange, water use and human rights. While about 90 percent of emerging market companies
reported some kind of information on their ESG policies and activities, few (around one in 10) used
the GRI standard or another international norm. Nonetheless, of the markets studied, Brazil andSouth Africa are distinct leaders, and GRI was gaining the most traction of all of the reporting
standards in the markets studied.
• Local exchange listing and regulatory requirements were the most important drivers ofsustainability reporting, highlighting the necessity for advocates of sustainability reporting towork with governments and exchanges in developing standards. Brazil and South Africa had
the highest rates of corporate sustainability reports out of the four markets studied by the EMDP
and regulations or local exchange listing requirements for sustainability reporting. This allowed thecountry teams to focus on report quality, scope, ESG performance and GRI conformance.
• The use of scorecards offering comparable data to companies proved effective in getting
lagging performers to the negotiating table and helped team members host productive 
meetings with companies. All of the teams reported that companies, initially skeptical aboutengaging the teams on sustainability disclosure topics, were more willing to do so once they saw
their competitors were reporting and undertaking sustainability activities. At the same time, it waseasier for teams to pinpoint areas for improvement for companies and for firms to see a clear path
toward better sustainability reporting with this benchmark data readily available.
• As in developed markets, investor relations departments and senior management at times
appeared detached from internal sustainability efforts and need to be brought into the process to yield meaningful, long-term results. Many of the teams found that sustainability
reporting from companies in the local markets served more as public relations or “green washing”
than as meaningful disclosure and sustainability efforts. The teams noted that buy-in from senior
management led to an engagement process with more meaningful results.
Further information on the country teams is found in the subsequent chapters.

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 2012

9

BRAZIL

B

razil hosted the Rio+20 United Nations Conference on Sustainable Development in 2012—marking
the 20th anniversary of the United Nations Conference on Environment and Development, which
was also held in Rio de Janeiro in 1992. In step with the country’s popular sustainability movement,
Brazilian companies have been making tremendous strides towards ESG disclosure. In 2010, 144
Brazilian companies adopted the GRI framework, a 71 percent increase from 2009.

EMDP BRAZIL TEAM BY NUMBERS

24

PARTICIPANTSCountry Team Leads• 	HSBC: Cinthia Gaban, SRI Analyst (no longer withthe organization)• 	PREVI: Rafael Castro, Strategic Planning Manager;
Marta Xavier, Corporate Governance Manager;
Renata Dias, Analyst; and Regina Pereira, Analyst

Coordinator• 	Principles for Responsible Investment (PRI)
Secretariat: Valeria Piani, Head of Investor
Engagements; Marcela Zonis, Brazil Network
Manager; and Camila Yamahaki, former consultant

Local Participants

102
17• Ático	
Asset Management: Joana Salgado, Analyst• 	Astra Investimentos: Andrew Jenner, Executive
Director• 	Banco Fator Corretora: Bianca Gandra,
Sustainability Coordinator; and Iago Whately,Research Analyst• 	BB DTVM: Andrea Marinho, Head of Equity
Research; Cristina Fraga, Senior Assessor; andLuiz Galvão, Assessor• 	BM&FBOVESPA: Sonia Favaretto, Director of
Sustainability; and Sonia Bruck, Sustainability
Manager• 	Centrus: Adriana dos Reis, Investment
Manager• 	FIM: Mikko Linnanvuori, Fund Manager• 	FIR Capital: FIR Capital: Monica Toscano,
Gabriela Souza, Tatiana Alvisi (no longer with theorganization) and Marcella Gadbem (no longer withthe organization), Corporate Governance Team• 	Finanças Sustentáveis: Cassio Trunckl,
Partner-Director and Victoria Mattarozzi, Partner• 	Funcef: Decio Guimarães, Special Advisor to
the President• 	Vontobel: Sabine Doebeli, Head of Sustainability
Management• 	Fundação Brasileira para o Desenvolvmento
Sustentável (FBDS): Clarissa Lins, Executive
Director• 	Infraprev: Carlos Frederico Aires Dutra, Director
Superintendent• 	Itaú Unibanco: Cristina Spehoff, ProductSpecialist; and Alexandre Gazzotti, Analyst• 	Petros: Alcinei Rodrigues, Investment Manager(no longer with the organization)• 	Real Grandeza: Raquel Castelpoggi, Coordinatorof the Socio-environmental Responsibility Programand Marcia di Luca Micheli, Investment Analyst• 	Santa Fé: Paulo Bueno, Partner and Portfolio
Manager and Eline Galláfrio, Analyst• 	Santander Brasil Asset Management: Hugo
Penteado, Chief Economist and Head of SRI; Fabio
Guido, Research Analyst & SRI; and Maria Eugenia
Buosi, Research Analyst & SRI (no longer withthe organization)• 	Solaris Investment Management: Katherine
Youhanna, Marketing & Client Services Consultant• 	Sul América: Leopoldo Barretto, COO; and Luis
Alves de Lima, Analyst• 	Valia: Milena Miranda, Strategic Planning Analyst

Companies Contacted• 	The team contacted companies through letter-writing campaigns and outreach by team members.
Companies Engaged• 	The team decided to keep the names and content of the dialogue with companies confidential tomaximize trust and increase the willingness of companies to engage with the team.
Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 201210

Investor Signatories Supporting
the EMDP Brazil Team
1. Astra Investimentos
2. Ático Asset Management
3. Banco Fator Corretora
4. BB DTVM
5. BM&FBOVESPA
6. Boston Common Asset Management
7. B ritish Columbia Investment
Management Corporation
8. Calvert Investments
9. Centrus
10. Charlemagne Capital

11. Comgest
12. Cyrte Investments
13. F&C Asset Management
14. FIM
15. Finanças Sustentáveis
16. FIR Capital
17. Funcef
18. F
 undação Brasileira para oDesenvolvimento Sustentável (FBDS)
19. HSBC Asset Management
20. Infraprev
21. Itaú Unibanco
22. Norges Bank Investment Management
23. Petros
24. PREVI
25. Real Grandeza
26. Santa Fé Portfolios
27. Santander Asset Management
28. Solaris Investment Management
29. Sul América Investimentos DTVM S.A.
30. Sustainalytics
31. Tripod Investments
32. T. Rowe Price
33. TIAA-CREF
34. Valia
35. VIPeV
36. Vontobel

In addition, 53 publicly-traded Brazilian companies
responded to the Carbon Disclosure Project (CDP)questionnaire in 2010. The Brazilian Stock Exchange,
BM&FBOVESPA played a key role by:• Creating governance-themed listing segments;• Launching a Corporate Sustainability Index (ISE); and•	Adopting a ‘comply or explain’ approach tosustainability reporting.
To bolster competition on governance performance in themarket, BM&FBOVESPA launched governance listing
segments in 2001 with three listing levels, demonstratingclear levels of corporate achievement in this area. All
Brazilian companies listed at BM&FBOVESPA are required
to publish governance metrics annually, including the
responsibilities of the board and its committees, profilesof directors, and information on remuneration policies andpractices. (These requirements are tied to regulations
promulgated by the financial regulatory authority in Brazil,
the Comissão de Valores Mobiliários.)
Additionally, in 2005 BM&FBOVESPA launched the first
Brazilian sustainability index, the Corporate Sustainability
Index (ISE), composed of equities selected according tosustainability criteria. From 2012, BM&FBOVESPA has
made the companies’ questionnaires available to the public
when authorized by the companies, which has improved theoverall level of ESG disclosure to investors, and also has
added a “report or explain” component asking companies
not issuing a sustainability report to detail their rationale.
Brazil’s advances in sustainability reporting presented aunique opportunity to the EMDP Brazil team for promoting
greater transparency among companies on ESG issues,and the diversity of participants—investors, research firms,
multilateral institutions and civil society organizations—on
the EMDP Brazil team helped it achieve the distinctions of
attracting the highest number of supporters, as well as
contacting and engaging the most companies.
THE TEAM: Brazil was the largest of the EMDP country

teams with 24 participants. The PRI Secretariat coordinatedthe activities of the group, while HSBC, Itaú Unibanco,
Caixa de Previdência dos Funcionários do Banco do Brasil(PREVI), Santander Brasil Asset Management and Valia led
dialogues with companies and signed letters of inquiry toLessons Learned: The Emerging Markets Disclosure Project, 2008 – 201211

target firms. Several other team members also signed letters and took part in dialogues with companies,
including BB DTVM, Infraprev, Real Grandeza, Sul América and Valia. Other organizations notparticipating directly in the EMDP backed the team by co-signing letters to companies—36 in all—including several international signatories. (See box.)
APPROACH: Like the other teams, the EMDP participants in Brazil sought to leverage the influenceof local and international investors to maximize outcomes. This was critical as language presented abarrier to foreign investors engaging local companies, something local partners were able to help
facilitate. The Brazil team tackled engagement in two stages. As part of the first phase, investors
endorsed letters to companies in the IBrX-100 to congratulate those that had used the Global
Reporting Initiative (GRI) framework to report in 2010—45 in all—and to encourage the 50 companies
who had not used it to produce a GRI-based report. In the second phase, spanning 2011 and 2012,
the investor signatories engaged with 22 companies through letter writing and meetings to encouragethem to adopt the GRI framework.
The second phase of engagement activities was supported by the use of two different scorecards
to evaluate the level of the targeted companies’ disclosure and to support the dialogue between
companies and investors. In the first round, the participating investors used the scorecard developedby the EMDP. (This scorecard is reviewed in the introduction to this report.) However, in the second
round, the team chose to analyze the companies’ level of disclosure using the GRI core indicators—
those used for the basis of the GRI Application Level C—representing an expanded indicator set.
ROUND ONE SCORING: The team opted to keep confidential the names of the companies, but it

has shared the results of its two rounds of scorecard evaluation. For the first round, using a tailoredversion of the EMDP scorecard, the Brazil team found that out of 10 companies:• Environment—the average company’s score was 35 percent of the available points in theenvironmental criteria. Seven companies reported
ROUND ONE SCORING
their activities on energy and water use, but only three100%
companies published policies on energy use. Twodisclosed policies on water use and recycling, but none90%
% of Totalof the companies reported environmental targets. In
80%
addition, six companies responded to the Carbon
Disclosure Project (CDP) questionnaire in 2010, four
70%of which made their responses public.
50%
40%
30%
20%
10%

ll
ra
ve

O

ci
fic

ou

nt

ry

-s

pe

en

er

al

e
nc

G
C

G

ov

er

na

So

ta
en
m
vi
ro
n
En

• Governance—on par with the environment, thecompanies scored 36 percent on average of theavailable governance criteria points. Eight companies

ci
al

0%

l

• Social—companies earned on average 40 percent of thepoints available under social criteria in the scorecard, thesecond highest percentage under the five pillars. Nine
companies disclosed their policies on child and forcedlabor, six companies on discrimination, four on freedomof association, and three on collective bargaining. In
addition, six companies reported their health and safety
activities. However, only three reported health and safety
data, and none had set targets.

60%

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 201212

offered information related to the independence of board members, but only two disclosed the
independence of board committee members. Four had a board-level sustainability committee.
On ethical considerations, nine companies disclosed their policies on bribery and seven on
anti-competitive practices.
• General—the lowest scoring pillar of the five, the average company received only 15 percent of thepoints available under this pillar. Only two companies had published a sustainability report, andnone had a report audited by an independent organization. Six disclosed their ESG policies forselecting suppliers, but only one reported how it monitored suppliers’ performance.
• Country-specific—a flexible portion of the EMDP scorecard intended to give teams an opportunity
to choose indicators pertinent to the local market, the Brazil team opted to include metrics on social
investment programs. These programs are mostly philanthropic activities involving investments intraining, social services and environmental initiatives in local communities where the companies
operate, and they are common and valued highly in Brazil. Nine companies (90 percent) reported
their social investment programs, three of which (30 percent) provided an evaluation of theeffectiveness of these programs. This was the highest scoring pillar of the five with companies
on average earning 53 percent of the points available.
THE SECOND ROUND—a GRI scorecard was developed and employed to assess the 12 targetedcompanies. The GRI framework is distinct from the EMDP scorecard in the following ways:• GRI has four pillars, and they differ slightly from the EMDP scorecard’s five categories.

• GRI emphasizes disclosure and does not have performance-based criteria, such as whether thechairman and CEO positions at a company are separate.
• GRI has an economic indicator absent from the EMDP
scorecard, which captures data on acompany’s economic impacts.

ROUND TWO SCORING

100%
90%

% of Total

80%

Overall, the EMDP Brazil team found:• Governance—the highest scoring pillar of the four,
earned companies 72 percent of the points available
on average. All of the targeted companies reported
information on the responsibilities of the board andboard committees and offered profiles of their board
members, and most companies had a mechanism forshareholders and employees to provide recommendations
to the board.

70%
60%
50%
40%
30%
20%

ll
ra
ve

al

O

ci
So

vi

ro
n

m

en

ta

ic
m

no

Ec
o

En

G

ov

er

na

nc

e

0%

l

10%

Research firm Sustainalytics assisted the EMDP
Brazil team with this evaluation.

• Economic—companies received on average 29 percentof the points available under economic criteria. All of thetargeted companies reported information on distributed
added value, and seven reported information on private
pension plans. Five companies reported information on
tax benefits, and 11 disclosed information on their social
investment programs, a country-specific element under
the EMDP scorecard.

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 201213

Lessons Learned in Brazil• Environment—the weakest area
for the companies in scoring,companies on average earned
6 percent of the total points. Most
companies did not disclose, or onlyoffered a very limited amount of
information, on their environmental
performance. Only two companies
responded to the CDP questionnairein 2012.
• Social—another poor showing
for the companies; they earnedon average 9 percent of the points
available on social issues. As
required by the local exchange,
all of the targeted companies
published the total number of
employees broken down by region.
In addition, 11 out of the 12 offereddata on employee turnover rates,and eight companies reported their
public policy position in their codesof ethics. However, none of thecompanies reported information
on human rights performance andproduct responsibility.
ENGAGEMENT: In the first stage,

the team sent letters to all of thecompanies and exchanged
information, but it did not holdmeetings with any of the companies.
Company meetings were undertaken,
however, during the second stage ofthe group’s activities.
In the second stage, 10 targetedcompanies received letters in roundone, and the response level was very
positive, with eight of the companies
replying and agreeing to meet with
the EMDP team. A representative of
the PRI Secretariat was present in all
meetings, and the GRI representativein Brazil joined the investors in fiveof the eight meetings. In the second
round, all 12 targeted companies

By Team Coordinators Valeria Piani, Marcela Zonis and Camila
Yamahaki, Principles for Responsible Investment (PRI) Secretariat
The EMDP Brazil team accomplished much over the three years of the
project and offered the following thoughts about their work:• 	Although setting up direct meetings with companies was difficult
at times, it was the most useful form of dialogue and yielded thelargest gains in ESG disclosure from the companies. Even when
direct talks did not produce a tangible concession or victory,
they were instrumental in raising awareness among targetedcompanies and the market about the importance of ESG disclosure.
The team also learned a great deal about barriers the company
executives faced in trying to implement ESG disclosure programs,
which helped the team develop solutions to present to companies
going forward.
• 	The participation of a significant number of PRI signatories beyond
the core EMDP team clearly demonstrated the importance thatthe investors give to the subject and the Brazilian market, and was
extremely valuable in getting the attention of corporate executives.
• 	The use of scorecards, especially the one that analyzed thecompanies’ level of disclosure according to GRI’s framework,
proved to be a very useful tool for the investors in meetings
with companies, especially in offering a benchmark for good
corporate performance.
• 	The EMDP collaboration brought together many disparate efforts
which proved effective in advancing ESG disclosure. In total, 36 PRI
signatories, including eight asset owners, 22 investment managers
and 6 service providers, as well as the Global Reporting Initiative(GRI), supported the team’s engagement efforts, a remarkable showof strength and support for sustainability reporting.
These dynamics, the team believes, contributed to its success.
PREVI, an EMDP team leader since the project’s inception, said it
drew tremendous value from the collaboration. Before its involvementin the project, PREVI had been promoting the value of sustainability
reporting to companies in its invested universe. However, PREVI says
the EMDP helped greatly to amplify its effectiveness.
Having gleaned valuable lessons from the EMDP experience, theEMDP Brazil team has the following advice to lend to local andforeign investors engaging Brazilian companies:• 	Engage with companies in collaboration with other investors.
• 	Evaluate the companies’ level of disclosure and practices before
the meetings.
• 	Persist, as scheduling meetings with companies is not always easy.
• 	Engage in a constructive dialogue so that companies’ views are also
heard and always try to learn from the companies’ experiences intrying to implement ESG disclosure programs.
• 	Demonstrate to the targeted companies how investors use
ESG information.

• 	Contact both the company’s investor relations team and thesustainability
department
to underscorethe link
betweenLessons Learned:
The Emerging
Markets
Disclosure Project,2008– 2012 ESG
14risks and opportunities and shareholder value.

received letters. The group met nine companies. Once again, a representative of the PRI was present
in all meetings, and the GRI representative in Brazil joined the investors in 3 meetings.
Results—In the first round of the second stage, the EMDP Brazil team learned from four of the eightcompanies that they had already decided to publish, or had already issued, sustainability reports, andthe group agreed to monitor their progress. Another two of the eight said that they had been discussing the possibility of adopting the GRI framework, and the team offered them information on thebenefits of GRI and have kept dialogues open with the companies. Two other firms did not reply tothe investors’ letters. In the second round, the investors met with nine of the 12 companies. Three ofthese companies plan to adopt the GRI framework in 2012, while two pledged to publish a report in2013. Another four said that they would agree to discuss the possibility of using GRI internally.
OTHER ACTIVITIES: The EMDP Brazil team held workshops in 2010 and 2011 to discuss withlisted companies the importance of reporting ESG information and adopting the GRI framework.
In 2010, Santander Asset Management Brazil hosted the first event, which attracted approximately
120 participants. The workshop was organized in two panels. The first, composed of investors—
pension fund PREVI, asset manager Santander Asset Management and the local stock market
BM&FBOVESPA—discussed how various types of investors use ESG information in their investment
processes. The second, comprised of two GRI reporting companies—Vale and Energias do
Brasil—and the Brazilian GRI representative, talked about how the experience of GRI reporting
benefited the reporting companies. In 2011, the second workshop, held at BM&FBOVESPA, attracted
more than 140 participants. The same structure from the previous event was adopted. In the firstpanel, the investors—HSBC, Valia and Itaú Unibanco Asset Management—discussed the importanceof sustainability reporting from the investors’ perspective and how ESG information is used in theirinvestment decisions, while the second panel focused on the corporate perspective on sustainability
reporting and included representatives from Itaú Unibanco, Natura, Cemig and GRI.
LOOKING AHEAD: The EMDP Brazil team plans to continue to work together to follow up on

engagement efforts and to coordinate events and other activities. Team members will organize
another disclosure workshop in June 2013 to evaluate progress in the industry overall, and all of thecompanies engaged during the EMDP project will be encouraged to attend. The PRI engagement
working group, which led the EMDP in Brazil, also intends to undertake new engagement activities
with Brazilian companies that are focused on management of ESG issues. The group will organize
the dialogue with companies by sectors, starting with utilities.

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 201215

INDONESIA

T

he archipelago nation of the Republic of Indonesia was the least advanced country selected by
the EMDP in terms of having a regulatory framework, a critical mass of companies practicing
sustainability disclosure and financial institutions implementing ESG investing strategies. Thissituation was challenging, but also presented opportunities for educational and outreach efforts.
The EMDP Indonesia team spent extensive time hosting online and in-person meetings to raiseawareness of global sustainable investing trends and local possibilities. The team also conducted
research on local and international financial institutions’ approaches to using ESG information inassessing investments in Indonesia, a unique facet of the team’s activities.

EMDP INDONESIA TEAM BY NUMBERS

11

PARTICIPANTSCountry Team Leads• IndonesiaWISE: Amol Titus, CEO
Coordinator• Principles of Responsible Investment (PRI)
Secretariat: Valeria Piani, Head of Investor
Engagement; and Arleta Majoch, Assistant30

Local Participants• Bank Negara Indonesia (BNI): Sakariza Qori
Hemawan, Group Head of Corporate Responsibility• Jamsostek: Karsanto, Compliance and Risk
Management Director• Minaca Selaras: David Finneren, Director

Companies Engaged• PT. Adaro Energy• PT. ANTAM• PT. Astra Agro Lestari• PT. Astra International• PT. Bank Mandiri• PT. Bank Negara Indonesia• PT. Berlian Laju Tanker• PT. Chandra Asri Petrochemical• PT. Ciputra Development• PT. Citra Tubindo• PT. Gajah Tunggal• PT. Holcim Indonesia• PT. Indika Energy• PT. Indocement Tunggal Prakarsa• PT. Indofood Sukses Makmur

International Partners• BNP Paribas Investment Partners:
Tino Moorrees, President Director,• Comgest: William Holmberg, Investment
Specialist• Nordea: Ylva Hannestad, Analyst• Threadneedle Asset Management: Cathrinede Coninck-Smith, Governance and Responsible
Investment Analyst• VIP eV: Hans-Martin Buhlmann, CEO• PT. Indorama Synthetics• PT. Indosat• PT. International Nickel Indonesia/Vale• PT. Medco Energi Internasional• PT. Mitra Adiperkasa• PT. PAN Brothers• PT. Perusahaan Gas Negara• PT. PP London Sumatra Indonesia• PT. Riau Andalan Pulp & Paper• PT. Telekomunikasi Indonesia• PT. Timah• PT. Ultrajaya Milk Industry• PT. Unilever Indonesia• PT. United Tractors• PT. XL Axiata*The reference to “PT” in all Indonesian company names is an abbreviation for Perseroan Terbatas, which translates to “limited
liability company.”

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 201216

THE TEAM: The CEO of IndonesiaWISE, Amol Titus, led the EMDP Indonesia team, with the supportof the PRI Secretariat. The team benefited from a diversity of local companies—Bank Negara
Indonesia, Jamsostek and Minaca Selaras—and international institutions—BNP Paribas Investment
Partners, Comgest, Nordea, Threadneedle Asset Management and VIP eV—which lent the teamgreater credibility and opened access to corporations and other institutions in the market.

IndonesiaWISE conducted the research, analysis and corporate engagement, and was supported inthese activities by Minaca Selaras in 2010 and PRI in 2011. In addition, IndonesiaWISE raised the
profile of the project with listed companies, financial institutions, regulatory bodies and civil society
organizations, through meetings, webinars, workshops and other events. An example of these
activities were well-attended seminars hosted in Jakarta in 2010 and 2011, where the team brought
together a broad coalition of stakeholders to discuss the implementation of corporate best practices
in sustainability performance and reporting. Several leading institutions participated: Bank Mandiri,
CBUS, IFC, Indonesia Biodiversity Foundation, Indonesia Capital Markets Advisory Body Roundtablefor Sustainable Palm Oil, Indonesia Stock Exchange, PRI, Standard Chartered Bank and the U.S.
Agency for International Development (USAID).
Jamsostek, BNI and BNP Paribas brought their institutional perspectives and best practices tothe project. In particular, Jamsostek, Indonesia’s leading social security provider and a key local
institutional investor, lent its experience in ESG integration and participated in local seminars to shareits experiences with other investors. Meanwhile, BNI, one of Indonesia’s largest banks, offered its
unique views from using sustainability parameters from the banking world. In addition, as a global
securities and asset management house with a strong presence in Indonesia, BNP Paribas Investment
Partners helped the team to gauge how foreign institutions were implementing sustainable investment
strategies locally.
The team leader also volunteered capacity building support to companies and institutions andconducted half and full day workshops. The project partners viewed these activities as vital forcompanies to understand fully the value of ESG concept, leading to adopting longer-termsustainability objectives in the future.
APPROACH: The EMDP Indonesia team took a novel approach to its research efforts in assessing

ESG practices of both a sample of publicly-traded companies and financial institutions, as well asother key stakeholders. The team had noticed that while some Indonesian firms, especially those witha multinational reach, had embraced at least some degree of sustainability disclosure, the appetite
for such information among local and global asset owners and fund managers was weak. The team’s
strategy was to advance broader sustainability reporting among companies by using two pressure
points—through their own engagement efforts and by growing the number of financial institutions
demanding this type of information. This approach also helped bolster support for local regulatory
moves to encourage greater corporate transparency on ESG issues.
Local capital markets dynamics—The Indonesia Stock Exchange (IDX) has been one of the fastest

growing capital markets since 2008 and an outperformer during a period when financial turmoil has
impeded growth elsewhere. While the IDX is dominated by foreign institutional investors, local mutualfund firms and asset owners are increasingly present. Local regulators have focused on fighting
corruption, insider trading and other forms of market manipulation and increasing transparency,
including corporate sustainability disclosures, through corporate disclosure mandates and exchange
listing requirements.

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 201217

In addition, the IDX worked with a local biodiversity foundation Kehati to develop an SRI index thathas been tracking the IDX performance closely (although uptake from investors has been limited).
Launched in 2009, the index has 25 equities that are subject to review every six months. Apart fromsome financial criteria, the index reviews corporate performance on environmental, community,
corporate governance, human rights, ethics, and labor practices. It also screens for use of certain
pesticides, nuclear power, weapons, tobacco, alcohol, pornography and gambling.
The team found that very few companies had received inquiries about their ESG performance frominvestors, and, when they did, the information requests varied. Furthermore, during the engagement
process, the companies noted that their sustainability metrics did not seem to affect investors’decisions about holdings or pricing of their stock. The involvement of Jamsostek—a company that
had incorporated ESG information into its investment processes, spurred many Indonesian companies
to take notice of the project.
Multilateral institutions, including the Asian Development Bank (ADB), European Development Financeinstitution DEG, and International Finance Corporation (IFC) indirectly supported the EMDP Indonesia
team’s efforts through their own due diligence on ESG performance, which helped to reinforce theteam’s message with companies and other stakeholders.
The EMDP Indonesia team sought to open a dialogue with all of these parties and other key
stakeholders—asset owners, fund managers, developmentbanks, multilateral institutions,
EMDP Indonesia Team’s Target
business associations and civil society organizations—
Stakeholders for Dialogue
to raise awareness of the project and its activities andto prompt some of them to become proponents of2011 Target Stakeholders
greater sustainability reporting. (See box for a list of
1. Indonesia Stock Exchange
the organizations.)
Company research—In selecting companies to research, theteam decided to include broad industry representation, as
well as a mix of companies by size and geographic scopeof activities. However, a challenge was finding companies
willing to cooperate with the group’s research efforts.
The team found that only 30 out of 400 publicly-traded
companies in Indonesia were disclosing any sort of
ESG information. After completing preliminary research,
the team utilized the EMDP scorecard for a subset of
16 companies in 2010 and 14 in 2011. The scorecard usedby the EMDP Indonesia team added elements on HIV-Aids,
corporate social investment and compliance with local
regulatory requirements under its country-specific criteria.
It also expanded indicators in the categories of climatechange, waste management, water use, human rights,
employee health and safety, stakeholder engagement,anti-bribery safeguards, board, board committee andauditor independence, and overall transparency andquality of financial and sustainability reporting.

2. Indonesia Biodiversity Foundation-Kehati
3. DEG

4. First State-Colonial First State Investments
5. PT. BNP Paribas Investment Partners
6. Indonesia Chamber of Commerce andIndustry-KADIN
7. National Center for Sustainability

2010 Target Stakeholders

1. Indonesia Stock Exchange
2. Bank Indonesia
3. Bapepam-LK
4. International Finance Corp.
5. Asian Development Bank
6. PT. Jamsostek
7. PT. BNP Paribas Investment Partners
8. PT. Schroder Investment Management
9. Conservation International

10. WWF Indonesia

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 201218

Investor Views of
ESG Disclosure in Indonesia
The EMDP Indonesia team found that the 30 firms werestrongest in the social criteria as compared to theenvironmental and governance factors. This is in partdue to a local market regulation requiring companies toundertake corporate social responsibility activities as well
as a cultural preference to be perceived as helping society
through philanthropy and charitable activities. Disclosureof employee related benefits, training, and health and safety
practices also were common among the 30 companies,
although detailed health and safety metrics and targets
were rare (about a fifth of the companies had these).
The analysis also showed disclosure of the impact ofcompanies’ operations on local communities was lacking—a significant sustainability risk for resource extraction firms
in Indonesia, which often impact indigenous peoples andtheir communities. Human rights were only discussed
among about a quarter of the companies, as was the issueof discrimination.
The analysis also showed that the 30 companies madelimited inroads into environmental disclosures, especiallyregarding disclosure of company policies, results fromgovernment audits of facilities, waste management
practices, and certification of management systems, suchas ISO. Approximately 60 percent of the 30 firms madethese types of data available. However, few companies
were looking at energy use (about a third), greenhouse gas
emissions (fewer than a fifth), or other major environmental
risks such as water use and toxic emissions.
Governance disclosure was another weak area for the
30 companies, especially on board independence.
While there appeared to be some awareness of this issue
among the companies in the wake of the 1997–1998 Asianfinancial crisis, there was much room for improvement.
The companies did not reveal how their boards were
evaluating and taking action on key issues for investors
or how codes of ethics were implemented. Director
independence and the key roles independent directors
play also were not publicly disclosed. While the majority ofcompanies studied had audit, remuneration and nominationcommittees, risk functions tended to be relegated to
management. In addition, while most companies had
ethics and related anti-bribery codes, few were made public.

The PRI Initiative’s 2011 survey of six key

global investors in Indonesia— BNP Paribas, Colonial First State Asset Management,
Comgest, DEG (part of KfW Group), Nordea
and Threadneedle—found that ESG information
is important to investors in assessing the viability of investments. One firm said that: “Whencompanies in Indonesia suddenly decided toswitch from processing noodles to palm oil
plantations, which require a great depth ofknowledge and skills to be run sustainably, we
decided not to invest in those companies on
the basis of our qualms about their sustainability approach and we would choose morecredited producers.”
The research also found that investors thoughtthat quantitative data is usually missing inreports from Indonesian companies. Nevertheless, investors acknowledged increasing levelsof ESG disclosure in Indonesia. One investor
commented on Indonesian companies with
exposure to European investors: “They haveall of their sustainability data, and we tried toencourage them to just incorporate it in theirannual report. There are quite a few Indonesiancompanies that could very quickly have very
good sustainability reporting because they’recapturing all of that information.”
Investors interviewed by PRI Secretariat also
expressed that a lack of information on
corporate governance is a constraint toinvesting in Indonesian firms. Investors
perceived that many companies had opaque
practices, making them unattractive tolong-term investors. Many companies
also are controlled by families instead ofmajority shareholders, and this holding
structure often prevents non-majority
shareholders from executing their ownershiprights and engaging with the management.

At the same time, investors viewed the general
corporate culture of Indonesian companies
towards shareholders as positive when major
governance faults do not exist. Investors citedseveral examples where companies had been
receptive to interactions with investors. An
investor confirmed that: “Companies areopen to dialogue and suggestions.” Anotherinterviewee elaborated further, stating:“Indonesian companies are rather open to
engagement; they are nothing like Chinese
While the team’s evaluation demonstrated that disclosurecompanies who are not interested at all in
is improving and in some instances it was in line with GRI,
what you say. In Indonesia, one of thethere remained a tendency for descriptiveness rather thanreasons is that many companies nearly wentbankrupt during the Asian crisis. A lot of thesecompanies understand that good, strong
Lessons Learned: The Emerging Markets
Disclosure– 2012
19
shareholders
are Project,crucial 2008
to themand arewilling to dialogue.”specific, verifiable, time series data. Also, since several companies were at initial stages of implementing ESG initiatives, the overall reporting remained weak. With room for improvement, the EMDP team
decided to focus on broader trends instead of specific company scores in shaping engagement efforts.
INVESTOR RESEARCH: In support of corporate engagement activities and to demonstrate investor

needs for sustainability information, the PRI Secretariat shared information from a survey it had
undertaken in 2011 with: BNP Paribas, Colonial First State Asset Management, Comgest, DEG(part of KfW Group), Nordea and Threadneedle. The study found that investors generally see
Indonesia as a market with significant growth opportunities. Interviewed investors confirmed that
good ESG performance is relevant for Indonesian companies and mentioned several examples in
the country that can serve as good models for sustainability. (See page 19.)
ENGAGEMENT: In talks with companies, the EMDP Indonesia team encouraged an integrated

approach to reporting by including quality sustainability information in annual financial reports.
Given the nascent state of sustainability disclosure in Indonesia, the team advocated for adoptionof the Global Reporting Initiative (GRI) guidelines only at companies with existing ESG disclosureand at larger companies with more resources. Many of the companies were not aware of GRI orother structured frameworks for ESG reporting. The team was able to speak with staff at most of
the 30 targeted companies.

Indonesia in Perspective
By Team Leader Amol Titus, President Director, IndonesiaWISE
The bullish trends in the wider Indonesian economy, the likelihood of an upgrade of Indonesia’s sovereign debt, local regulatory
reforms and the ASEAN capital markets initiatives brought renewed investor interest in Indonesia and with it increased scrutinyof Indonesian companies’ environmental, social and governance practices. The Indonesia EMDP team witnessed positive
developments in corporate sustainability disclosure in the market in terms of both the numbers of companies reporting andquality of the data. Nonetheless, much more progress is needed.
The team’s dialogues with companies revealed much work behind the scenes on sustainability initiatives. Many alreadyhad energy and water management programs, product development cycles incorporating sustainability factors, as well as
progressive human resources policies, including codes of conduct and anti-bias policies. In addition, Indonesia companies,
when they do disclose sustainability information, demonstrated a greater willingness to do so in their annual reports than peers
in more development markets, perhaps a harbinger of Indonesian firms leapfrogging from stand-alone sustainability reports tofully integrated reports in the years ahead.
Still, corporate managements must be made more aware of investors’ concerns about these issues and the link between ESG
risks and corporate performance. Many firms still are not reporting consistent metrics between years or comparing themselvesto competitors. Fewer are using international standards, such as the Global Reporting Initiative’s guidelines. The process starts
with awareness, builds with policy development and implementation, and ends in good stewardship. Investors and other key
stakeholders need to work together in Indonesia to encourage more companies to head down this critical path towardsustainability, which will not only benefit the companies and their shareholders in the long-term, but also society at large.
Financial institutions can and need to play a vital role in accelerating corporate adoption of ESG reporting. The EMDP spentmuch of its time in 2010 and 2011 researching, benchmarking and reaching out to investors on how they assess sustainability
risks. More involvement from asset owners and fund managers, as well as research analysts, government regulators and civilsociety organizations, will be needed if Indonesia is to catch up to other emerging markets in this field. The EMDP Indonesia
team has submitted its progress reports to the Indonesian President’s Advisory Office, which has supported the project’s
efforts. Hopefully regulatory changes in this area in Indonesia are in the not-so-distant future.
This project was a unique collaboration among a diverse group of research firms, local and foreign investors, and multilateral
institutions. The team is grateful for the experience and hopes this project will continue to add value to Indonesian capital
Lessonsdevelopment.
Learned: The Emerging Markets Disclosure Project, 2008 – 201220
market and its constituents at a crucial in the country’sCompanies gave three reasons for not issuing sustainability reports:
1. A lack of internal expertise and resources to compile information requested.
2. The high costs associated with engaging external consultants or auditors to author a report.
3. Absence of regulation mandating such a requirement.
In general, the companies expressed a preference for augmenting annual reports with commentaryand data on ESG issues rather than issuing separate sustainability reports, possibly a positive signthat many may leapfrog to more integrated reporting formats. However, the companies’ feedback
also points to the need for more education on the links between ESG and financial performance inthe market.
During the project, the team was successful in securing concrete policy changes and actions bycompanies and institutions. For example, a polyester and petrochemicals company, Indorama
Synthetics, expressed an interest in learning more about ESG based on best practices. The
company sought assistance from a consultant on understanding components of ESG, managerial
competencies and reporting requirements and identified some key focus areas: energy efficiency,
waste treatment and developing a corporate responsibility code.
On the institutional front, Indonesia’s leading social security provider, Jamsostek, sent a powerful
signal by incorporating ESG screens into its due diligence criteria for investments. This was a key
development because it emphasized to other institutions the importance of ESG and the need to
ask companies for greater disclosure and facts based on projects and practices.
At the policy level the team spoke with the President’s Advisory Unit, called UKP, which oversees
implementation of critical policies. Senior representatives from this office encouraged the EMDP’sefforts and were keen to learn about the progress of listed companies and institutions engaged
in ESG.
LOOKING AHEAD: Although EMDP is coming to a close in 2012, several participants, includingIndonesiaWISE, Jamsostek and BNI, remain committed to supporting ESG disclosure in the market
and promoting greater use of sustainability metrics in the investment process. The EMDP Indonesia
team believes that ESG issues will play a critical role in the development of financial and capital
markets in Indonesia.

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 201221

SOUTH AFRICA

T

oday, South Africa is a very
different country than the one thatsparked the divestment campaignsof the 1970s and 80s. By 2009,
South Africa’s Johannesburg Stock
Exchange (JSE) had implemented
a Socially Responsible Investment(SRI) Index—the first of its kind in an
emerging market. Furthermore, theJSE recently added a mandate on
integrated financial and sustainability
reporting, another pioneering stepin listing requirements for an
exchange. Therefore, South Africa
posed a unique opportunity for the
EMDP team.

EMDP SOUTH AFRICATEAM BY NUMBERS

10• Calvert Investments: Mike Lombardo,
Senior Sustainability Analyst and Manager, Index• MN Services: Faryda Lindeman, Responsible
Investment Advisor
Coordinator• Principles of Responsible Investment (PRI)
Secretariat: Narina Mnatsakanian, Head of Global
Networks, Recruitment and Emerging Markets Work
Streams (currently works for MN Services)
Local Participants• Element Investment Managers: David Couldridge,
Investment Analyst• Government Employees Pension Fund (GEPF):
Adrian Bertrand, Environmental, Social & Governance(ESG) Manager; and John Oliphant, Head of Investment
and Actuarial• Old Mutual Investment Group: Jon Duncan, ESG
Research Analyst• Public Investment Corporation (PIC): Deon Botha,
Senior Corporate Governance Specialist

THE TEAM: Led by Faryda Lindeman

from MN Services and Mike Lombardoof Calvert Investments, the 10-member
South Africa team relied on a diverse
group of people and organizations todraw from in researching and engaging
companies. The team included alongstanding South African financial
services firm, Old Mutual; local asset
owners—the Government Employees
Pension Fund (GEPF) and the Public
Investment Corporation (PIC); a South
African sustainable investments firm,
Element Investment Managers; plus
two Dutch SRI outfits, MN Services
and Robeco; and an American
sustainable investment firm, Calvert
Investments. In addition, a PRI
representative, initially Adrian Bertrand
and then Narina Mnatsakanian helped
coordinate the group’s activities.
Having local asset owners and fundmanagers on the team helped thegroup tremendously in navigating the
local context of sustainability reporting

PARTICIPANTSCountry Team Leads

International Partner• Robeco: Peter van der Werf, Responsible Investment
Advisor; and Carola van Lamoen, Responsible
Investment Advisor

10Companies Engaged• Aspen Pharmacare Holdings• Compagnie Financiere Richemont• Naspers• Netcare• Reinet Investments• RMB Holdings• Sasol• Shoprite Holdings• Steinhoff International• Tiger Brands

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 201222

The JSE SRI Index, an Emerging Markets Pioneer
The Johannesburg Stock Exchange (JSE) Socially Responsible
Investment (SRI) Index debuted in May 2004, making it the first of
its kind in an emerging market and the first SRI index to be launchedby an exchange. The JSE launched the index in response to growing
investor demands for sustainability information globally andparticularly in the South African context. At the time, the Second
King Report on Corporate Governance had urged companies toembrace the triple bottom line—incorporating environmental, socialand governance considerations—in balance with the need to generate
returns for shareholders. (The King reports are named for retired
Supreme Court of South Africa judge Mervyn E. King, who wastapped by the Institute of Directors in South Africa in 1993 to reform
corporate governance and improve transparency of publicly traded
South African companies. There have been three King reports todate, and their tenets have been implemented through listed
requirements on the JSE. Several also have been legislated throughchanges to South Africa’s Companies Act.)The JSE SRI index assesses the top 40 companies in the JSE-FTSE allshare index, as well as all mid-cap companies, on three broad criteria—
environmental, society and governance. (Small-cap companies canapply to be included in the index too.)
The assessment, conducted by UK-based research firm EIRIS, reviews
whether companies are improving environmental performance by:• Reducing and controlling direct negative environmental impacts;• Promoting awareness of its significant direct and indirect impacts;• Working to use natural resources in a sustainable manner; and• Committing to risk reduction, reporting and auditing.
On society, the JSE and EIRIS review whether companies are:• Treating all stakeholders with dignity, fairness and respect,
recognizing the rights to life, security and free association,
as well as to freedom from discrimination;• Actively promoting the development and empowerment of employees
and the community;• Ensuring that core labor standards are met and good employee
relations maintained; and• Working to promote the health and safety of employees.
The index also weighs performance on issues critical to South Africa,
including policies and programs to address HIV/Aids, as well as
progress on black economic empowerment (BEE).
To qualify for the index, companies also must demonstrate on
governance that they are:• Upholding and supporting internationally recognized good
governance and ethical practices;• Working toward long-term, sustainable growth by assessing,managing and mitigating ESG risks;• Managing broader ESG impacts within their sphere of influence.
Within each of the ESG pillars, the index reviews policy and strategy,
management and performance, and overall disclosure. In 2011, 74 out
of 109 companies reviewed made the index. For more information, see

http://www.jse.co.za/Products/SRI.aspx.

issues and in opening doors at South
African companies.
APPROACH: To select companies forengagement, the South Africa teamstarted with the FTSE-JSE All Share
Index companies that did not qualify
for inclusion in the JSE SRI Index.
The JSE SRI Index measures thetriple bottom line—the environmental,social and governance or “ESG”—
performance of companies in the
FTSE-JSE All Share Index andselects a subset of the highest scoring
companies based on ESG factorsaligned with the UN Global Compact
and other internationally recognized
standards for responsible corporate
conduct. As noted in the box below,
the JSE automatically evaluates the
top 40 companies in the JSE-FTSE
All Share index each year for possible
inclusion in the SRI index. The
EMDP South Africa team selected
10 companies from that top 40 poolthat did not qualify for the JSE SRI
Index to begin their engagement
efforts. This method was novel
among the EMDP teams, in that it
included many more factors related
to sustainability performance—not
only reporting—and was a productof the unique circumstances in South
Africa, primarily the wide adoption of
corporate sustainability reporting andthe existence of an SRI index withpublic data.
By leveraging existing research inline with the EMDP’s GRI focus andscorecard, the South Africa team
was able to spend more time
researching individual companies inmore depth and engaging companies
on issues. And, as a result, the team’s
benchmarks for measuring its own
success in company dialogue also

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 201223

were unique and went beyond disclosure to include:• Inclusion in the JSE SRI Index in a subsequent year.
• A company accepting responsibility for any significant ESG shortcoming, establishing a corrective
action plan and implementing appropriate measures to prevent similar problems from occurring
again. An example, which was a focus for the group’s dialogues with several companies, wasconvincing companies to establish greenhouse gas emission reduction targets.
After developing its strategy and conducting preliminary research in 2009, the South Africa teamconducted three rounds of engagement activities spanning the 2009, 2010 and 2011 calendar years,
including multi-year dialogues with several companies.

South Africa’s Sustainability Sensibilities
By Mike Lombardo, Senior Sustainability Analyst and Manager, Index, Calvert Investments

South Africa has a strong environmental, social, andgovernance (ESG) reporting environment and is a leader
among emerging markets and even on par or superior
to more developed markets in this regard. There areseveral factors contributing to South Africa’s success inpromoting corporate sustainability disclosure, including theKing Report on Corporate Governance (King III), the JSE
listing requirements and the JSE’s Socially Responsible
Investment (SRI) Index.
King III includes an entire chapter on integrated financial
and sustainability reporting—an objective being pursued
globally by a wide range of stakeholders through theInternational Integrated Reporting Council (IIRC). Influenced
by King III, JSE-listed companies have been required toadopt world class ESG reporting practices, and South
Africa’s new integrated reporting requirement set an evenhigher standard when it went into effect in March 2011.
Furthermore, many of South Africa’s leading companies
report on their ESG efforts using the Global Reporting
Initiative (GRI) framework, which is internationallyrecognized to increase the credibility, comparability, andutility of ESG metrics. Finally, the JSE SRI Index provides
an added incentive for companies to compete and excel inthese areas.

industry-led initiative to integrate ESG considerations into
the mainstream of retirement industry investment practices
in southern Africa. Launched in December 2011, the projectis developing a consistent framework and set of tools to
help retirement funds and their service providers comply
with the new Regulation 28 and CRISA. This project willundoubtedly serve to further drive ESG disclosure andreporting demands from asset owners.
Although South Africa is a leader in ESG reporting
among emerging markets, there is room for improvement.
Greater use of GRI indicators and reporting principles, wider
employment of third-party auditing and attestation and, ofcourse, overall better ESG performance are just a few of
the areas and some that were explored in dialogues withcompanies by the EMDP South Africa team.
Overall, the team had a range of successful dialogues withcompanies. For example, Aspen Pharmacare and Tiger
Brands demonstrated a strong willingness to engage andeventually their disclosure improved, as evidenced by their
inclusion in the JSE SRI Index. Naspers and Shoprite, on
the other hand, were at the opposite end of the spectrum.
Those two companies remained on the team’s target list
for the entire three years of the project, and in both cases,
members of the South Africa team attended the companies’
annual general meetings to publicly voice concerns,
which served to raise awareness among the companies’
management team and among other investors.

Enhanced corporate sustainability disclosure has raised
the bar for investors in South Africa too, and a separate setof initiatives have sought to urge investors to incorporate
ESG factors into portfolio management, including the CodeThe combination of local and international investors wasfor Responsible Investing in SA (CRISA) and the UN-backed
an important and critical element of our successes. In
Principles for Responsible Investment (PRI). CRISA camesome cases, the local investor participants had previous
into effect in February 2012 and requires institutional
relationships with companies, but were also able to attend
investors to incorporate sustainability considerations into
in-person meetings and AGMs, which proved much moreinvestment analyses and by following an active ownershipeffective than conference calls in establishing trust withapproach. In addition, Regulation 28 of the Pension Funds
companies. Finally, utilizing the JSE SRI Index inclusion
Act now requires pension fund trustees in South Africa to
as an indicator of performance offered a strong benchmark
give appropriate consideration to any factor which may
and tangible goal both investors and companies werematerially affect the sustainable long-term performance ofinterested in obtaining. And, in the end, a strong regulatory
a fund’s assets, including ESG characteristics. Also, theenvironment was a key ingredient in helping us achieve
Principal Officers Association and IFC have partnered toourEmerging
goals. Markets Disclosure Project, 2008 – 2012 24
Lessonsan
Learned: The
initiate Sustainable Returns for Pensions and Society,

ENGAGEMENT: Like the other EMDP country groups, the South Africa team wrote letters tocompanies and conducted conference calls and in-person meetings with company representatives.
However, the team also deployed a step of last resort, when a company was not responding torequests for a dialogue. In some of these cases, a local team member would attend the company’s
annual general meeting (AGM) to raise the groups’ concerns in person and in front of othershareholders. (South African activist investors also often withhold votes for board nominees or othercritical ballot items endorsed by management to express dissatisfaction over corporate conduct on
ESG issues much in the same way that U.S. shareholder proponents submit resolutions.)
The South African team focused on 10 companies, most on a multi-year track of talks and incremental
improvements. The outcomes of these dialogues are described below.
• Aspen Pharmacare Holdings: The EMDP team held its first successful dialogue with Aspen, amaker of branded and generic pharmaceuticals, in 2010, and the company committed that same
year to improve its sustainability disclosures and performance. As a result, the company was
included in the JSE SRI Index for the first time the following year.
• Compagnie Financiere Richemont: The luxury brands company was lagging behind its
competitors on sustainability reporting and performance, when the EMDP team contacted
Richemont in 2010. The company, however, declined to engage the investor group in 2010
and again in 2011 and continued to trail its competitors on ESG issues.
• Naspers: After repeated requests for a dialogue were rebuffed by the multinational media company,
David Couldridge of Element Investment Mangers attended the Naspers’s 2009 AGM to voice concerns,
specifically involving Naspers’s failure to produce a robust sustainability report and to make the cut for
the JSE SRI index. At the meeting, the CEO acknowledged the company’s poor record and committed
to address the issues before Naspers’s 2010 AGM. Naspers continued to make steady improvements
in 2010 and 2011, although not dramatic enough reforms to earn a spot in the 2011 JSE SRI Index.
Still, it published an integrated financial and sustainability annual report later in 2011.
• Netcare Group: The EMDP team requested a dialogue with the hospital and healthcare services
group for the first time in 2011 and learned that the company had been excluded from the JSE SRI
Index due to a controversy involving illegal kidney transplants that took place in some of its
hospitals. Netcare and JSE had discussions, and the JSE was of the opinion that Netcare’s board
and management had taken sufficient actions to prevent similar problems from ever occurring again.
It qualified for the 2012 index, and the South Africa team dropped its inquiry with the firm at thattime, as the company already had been issuing regular sustainability reports in line with the JSE
disclosure requirements and the GRI reporting guidelines.
• Reinet Investments: The team contacted Reinet, a financial holding firm with an interest in British
American Tobacco, because of its paltry sustainability reporting in 2010 and 2011. However, thefirm’s CEO believed that the company’s structure as an investment holding company made it
unnecessary for it to be concerned about sustainability reporting and no engagement took place.
• RMB Holdings: Robust sustainability reporting is common among South African financial services
firms, so the group was troubled by RMB Holdings’ lackluster disclosure practices. However,RMB Holdings declined a dialogue with the group in 2009, and further action with the company
was not taken. Nonetheless, whether due to pressure from the EMDP team or other factors, thefirm improved its reporting and was included in the JSE SRI Index in 2011 and 2012.
Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 201225

• Sasol: In 2009, EMDP participants opened discussions with Sasol, an energy company that
pioneered technologies in the field of coal gasification. Sasol said at the time that it had been
excluded from the JSE SRI index because the South Africa’s Competition Commission had foundit guilty of collusion and price fixing, but that it was working vigorously to resolve its shortcomings.
Sasol paid fines and instituted governance reforms to prevent similar issues going forward. Uponfollow up in 2010, Sasol had indeed improved its performance and made the index in 2010.
• Shoprite Holdings: The EMDP team contacted Africa’s largest food retailer in 2009 about its
public reporting, but the firm was not responsive. Ahead of the company’s 2010 AGM, EMDP teammember Deon Botha from PIC expressed to Shoprite’s chairman his intention to raise the team’s
issues at the meeting. Shoprite’s chairman requested that the group hold back their concerns for a
private meeting at a later date. The group agreed, which began a series of meetings with Shoprite’s
Chairman, CEO and senior management. The dialogue continued in 2011, and the company began
to make incremental improvements in its ESG reporting, although it has still not been included in the
JSE SRI Index to date.
• Steinhoff International: A retailer and manufacturer of furniture and household goods, Steinhoff
was quick to respond to the team and to address concerns surrounding the company’s sustainability
reporting and performance. Steinhoff’s executives assured the EMDP participants that it was in theprocess of preparing to release an updated and much improved sustainability report. In addition, thecompany noted that it planned to appoint a Sustainability Executive to its management team within
the year. The company was included in the 2010 JSE SRI Index, as a result of its efforts.
• Tiger Brands: The EMDP participants engaged consumer goods company Tiger Brands in 2009,2010 and 2011. In 2009, the group held an in-person meeting with the company, during which
Tiger Brands’ management acknowledged its weaknesses in sustainability reporting. Similar to
Sasol, Tiger Brands was fined by South Africa’s Competition Commission for price fixing. The
group continued to work with Tiger Brands in 2010 on improving its sustainability disclosures,and the company was included in the JSE SRI Index for the first time in 2011.
The South Africa team also held meetings with the Bench Mark Foundation and the African Institute ofCorporate Citizenship regarding the productive role investors can play in reforming corporate conduct
to raise awareness of the EMDP and its activities.
LOOKING AHEAD: The EMDP South African participants plan to continue their dialogues with severalof the targeted companies and have invited other investors to join them.

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 201226

SOUTH KOREA

W

hile on par with or moreadvanced than other EMDP
project countries on measures of
economic development, South Korean
companies and the domestic investor
community were just beginning to
explore global trends in sustainability
disclosure and investor responsibility
when the EMDP South Korea teambegan operating there in 2009.
However, the local firms’ lagging
performance offered a tremendous
opportunity for the team to raiseawareness and boost transparency.
Taking into account government
support for environmental initiatives,using information on companies’
competitors in other markets, andgalvanizing the voices of international
and local investors, the team was able
to push all of the companies it engaged
toward better sustainability reporting
practices and hopes to build on its
successes in the years ahead.
THE TEAM: With stewardship from

EMDP SOUTH KOREA TEAM BY NUMBERS

8

PARTICIPANTSCountry Team Leads• 	Boston Common Asset Management:
Lauren Compere, Managing Director*• Korea CSR Research Service (KOCSR):
Joowon Park, Executive Director*
Local Participants• Eco-frontier: Ji-Won Shin,Team Head Sustainable Finance Center*• 	Korea Corporate Governance Service (CGS):
Seonmin Kim, Analyst*• Korea Sustainability Investment Forum (KoSIF):
Jongo Lee, General Manager,• NH-CA Asset Management: Hyungeong Oh,
SRI Fund Manager• Solability: Sungwon Koo,
Head of Sustainable Research*• Sustinvest: Jungmin Han, Research Analyst*

15*2012 Company Scorecard Committee

Companies Engaged• Hynix• Hyundai Motor• Industrial Bank of Korea• KEPCO• Korea Telecom• Korea Zinc
• LG Chemical• LG Display• LG Electronics• NHN• POSCO• Samsung Electronics• Samsung Life Insurance• Shinhan Financial
Group• SK Telecom

co-chairs Lauren Compere, managing
director at Boston Common AssetManagement, and Joowon Park,
executive director at Korea CSR
Research Service (KOCSR), the EMDP South Korea team had support from two global research firms,
EIRIS (United Kingdom) and Responsible Research (Singapore), and four local research firms—Korea
Corporate Governance Service (CGS), Eco-Frontier, Solability and Sustinvest. The group also benefited from the involvement of KoSIF, as well as SRI Fund Manager NH-CA Asset Management. Withextensive expertise on board, the South Korea was well resourced for undertaking company research.
APPROACH: The EMDP South Korea Team began in 2009 by completing a baseline study of

10 major, publicly-traded Korean companies—Hynix, Hyundai Motor, KEPCO, Korea Telecom,
LG Chemical, LG Electronics, POSCO, Samsung Electronics, Shinhan Financial Group and
SK Telecom—and their sustainability disclosure practices. KOCSR, with significant support from
EIRIS and Responsible Research, authored the 2010 report—Unlocking Investment Potential: ESG
Disclosure in Korean Companies. The report found that the number of Korean companies publishing
Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 201227

sustainability reports had increased rapidly, with some even using the Global Reporting Initiative (GRI)
reporting framework for guidance. However, the report also warned that many of the reports lacked
quality and discussion of material sustainability risks, and said that only a tiny fraction of the reports
delivered greater transparency on ESG risk to investors. The report’s other major findings were:• Many South Korean companies, even larger listed ones, do not publish CSR reports, and it ishard to find any reporting within the financial service sector and among holding companies.
• However, for those reporting, environmental disclosure is strong. All of the companies
analyzed covered environmental issues in some depth and some displayed excellent reportingon the following: environmental policies and management systems, board-level responsibility forenvironmental issues, and quantitative emission data and quantitative reduction targets.
• Reporting on human rights is mostly ignored, with disclosure on the issue being non-existent or
superficial. Many commentators also found a worrying imbalance between the treatment of workers
in South Korea and the treatment of the company’s employees in overseas subsidiaries.
• Most companies disclosed on at least three indicators relevant to corporate governance.
However, on the issue of separation of chairman and CEO, only five companies met this challenge,a pattern similar to that found at other large Korean companies.
• South Korean companies exhibited poor reporting of policies on political donations, which
is a corruption issue very specific to South Korea. ‘Facilitation payments’ to bureaucrats haveemerged as a new form of bribery in South Korea. Each of the 10 companies analyzed disclosed
some information on their anti-bribery activities, but few disclosed political donations.
SCORECARD: The South Korea team also scored 10 companies in 2010 and 15 companies in 2011 toaid their engagement efforts, and the team established a Scorecard Committee in 2011 led by KOCSR
and comprised of CGS, Eco-Frontier, Solability and Sustinvest to share the workload, to collaborate
on research methodology and to raise the quality of the overall analysis. This was a unique research
partnership not duplicated by other EMDP country teams. The scores for the original 10 firms
improved incrementally, with Shinhan Financial Group demonstrating the largest gains, and the
new firms added to the study proved to be among the lowest scoring of the lot. (See table.) In fact,

SOUTH KOREA SCORECARD, 2010 – 2011

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Sh

Sa

m

su

ng

Fi
na

El

ec

tro

O
SC

cs

PO

ni
tro

El
ec

LG

LG

C

he

m

ic

al

om

O
re
a

n

Te
le
c

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ot

KE
PC
Ko

H

yu

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ai

M

H

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ix

s

100
90
80
70
60
50
40
30
20
10
0

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 201228

while all of the other 10 firms had published a sustainability report using GRI guidelines in 2010
and 2011, none of the newest five firms had published any sort of sustainability report in the past
two years, adding urgency in engaging these companies. Samsung Life Insurance was in theprocess of publishing its first sustainability report when approached by the team for engagementin early 2012.
ENGAGEMENT: Following the release of the report, the EMDP wrote letters to all 10 companies

profiled in May 2010 and invited them to provide specific feedback, as well as to meet with the EMDP
team members. This effort was supported by international investors in 2010, including Comgest,
LAPFF, New Zealand Superannuation Fund and Robeco, who were signatories to the company letters.
The EMDP South Korea team met with five out of the 10 companies in person in May and June 2010 inSeoul—Hyundai Motor, LG Chemical, POSCO, Samsung Electronics and Shinhan Financial Group.
Boston Common Asset Management as lead for the engagement phase of this initiative attended allcompany meetings with EIRIS attending most and at least one local Korean partner present as well.
While the timing did not work out for in-person meetings, Hynix, LG Electronics and SK Telecom also
responded to the group’s inquiries and agreed to offer feedback on the report’s findings. In general,
the team recommended that each of the companies incorporate more systematic stakeholder involvement into their ESG strategies, to monitor, audit, and report on social and environmental performance,
and to disclose political contributions. A distinctive focus of all the engagements was a discussion ofanti-bribery and corruption policies and a recommendation to provide more substantial disclosure on
how policies were being implemented, including training provided to vendors and suppliers.
Boston Common had met with three of the companies before—Hyundai Motors, POSCO andSamsung Electronics—and these companies demonstrated marked improvement compared to theend of 2007. (The three also were among the highest scoring companies in the group’s assessment.)
These companies had started to assess systematically material issues for inclusion in sustainability
reports and had started to include third-party commentary from a variety of stakeholders in reports
as well. Also, the three companies had begun responding to the Carbon Disclosure Project’s annual
questionnaire. Enhancements in the companies’ practices offered a springboard for the group to
discuss more advanced sustainability topics, including the mapping of key risks and opportunities,
such as greenhouse gas emissions, water use, and the tracking of conflict minerals and human rights
concerns in supply chains. Missing from the engagement line-up was KEPCO, the only firm of the 10
not to have responded to the CDP questionnaire, and Korea Telecom, among the higher scoring firms.
Round two—The EMDP South Korea team began the process again in 2011, but this time added five

firms—Industrial Bank of Korea, Korea Zinc, LG Display, NHN and Samsung Life Insurance, whichwere chosen because they had little or no sustainability disclosure. This brought the total number oftarget companies to 15. As in 2010, the group sent letters to all companies; however, in this roundthe letters were endorsed by 12 global and two Korean investors—EMDP team member NH-CA AssetManagement and newcomer Daesung Capital Management. The global signatories were The Church
Commissioners for England (UK), The Church of England Pensions Board (UK), Comgest Far East
(Hong Kong), Dignity Health (US), Etica SGR SpA – Gruppo Banca Popolare (Italy), Friends Fiduciary
Corporation (US), GES (Sweden), Mercy Investment Services, Inc. (US), MN (Netherlands), New
Zealand Superannuation Fund (New Zealand), Christopher Reynolds Foundation (US) and VIPAssociation of Institutional Investors (Germany).
In 2012, Boston Common Asset Management and KOCSR met with seven out of the 15 companies—
Hyundai Motors, Hynix, Korea Telecom, LG Electronics, Samsung Life, Samsung Electronics
Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 201229

and SK Telecom—in Seoul in March to discuss the findings and to encourage companies to takesustainability disclosure to the next level. In 2012, the EMDP team took the opportunity to raisequestions about each company’s plans for upcoming sustainability reports and to provide very
specific input on improvements each could make. Overall, the group found:• The original 10 target companies made good progress, especially Shinhan Financial Group,
which published its first group-wide sustainability report in 2011. Most were making greater
strides to include materiality assessments, third-party verification and GRI indicator mappings.
• The five firms added to the research and engagement efforts, especially the financial andnon-manufacturing companies, had the worst disclosure.

South Korea on the Cusp of Change
By Lauren Compere, Managing Director, Boston Common Asset Management

Investor voices in South Korea—from both local andforeign sources—as well as urging from government forcompanies to adopt low carbon and other green strategies
have placed South Korea at the precipice of a sustainability
transformation. But global sustainable investment fundmanagers and asset owners should take this good news
with a word of caution. Increased coordination andpressure in the market is much needed, and good
examples drawn from the EMDP’s experiences andother markets should be leveraged to propel South Korea
toward greater transparency. It was this very multifaceted
approach and use of several pressure points that the
EMDP South Korea team used in engagement efforts overthe past three years. Given the positive changes the South
Korea team won, its activities serve as a roadmap for
similar efforts in the market going forward. In particular, theKorea team learned that:•	Global and Korean partners collaborating together
on ESG disclosure, along with supportive messaging
from the government, helped win minds in corporate
offices. The EMDP team was able to draw from thestrong ‘low carbon, green growth’ message from theSouth Korean government and its National Pension
Service’s decision to sign onto the PRI to have corporate
executives take notice that concerns about sustainability
risks are shared by a wide range of actors andinvestors. More of this type of messaging is needed
given the early days of the sustainable investing
movement in South Korea, and it is most effective
when local investor partners, with their contacts at local
companies, are used in coordination with the influenceof foreign investors, as well as partners from government
agencies and multilateral institutions.

•	Many Korean companies still do not issue asustainability report, so the substance ofengagements for now still needs to be focused on
this basic first step. In 2012, the EMDP Korea Teamreached out to five Korean companies with no historyof publishing ESG information; only one responded—
Samsung Life Insurance. As many large Korean
companies still do not publish a sustainability report,
this process will need to be repeated many more times
before a critical mass of good actors prompts theircompetitors to change their practices.
•	As some of the best ESG reporting practices comefrom countries with regulations, listing requirements
and exchange‐sponsored SRI indices, investors
should also use their leverage with the Korean
governments and principal listing authority topromote reforms. Unlike Brazil and South Africa,
South Korea does not have a strong regulatory
framework for sustainability reporting, but this alsomeans that the market could learn much from its peers.
Given the support from the South Korean government
for companies to adopt more environmentally friendly
business strategies, this influence could be used with
examples from other emerging markets to urge the local
exchange and regulatory authorities to consider the role
corporate ESG disclosure and investor responsibility
can play to improve results for investors and otherstakeholders. Considering the South Korean
government’s influence on companies as well as thecultural context of regulation and listing requirements,
these are the fastest ways for investors to achieve
universal sustainability reporting.

•	Even though many Korean companies have yet to•	More Korean investment managers and asset owners
issue sustainability reports, responsible investors
should join PRI and global engagement initiatives.
can still raise key issues surrounding sustainability
This will help build networks and pressure points onrisks with them. While the EMDP South Korea teamcompanies in South Korea and help unify a message
was focused on ESG disclosure in its engagement
surrounding the types of ESG reporting, including GRI,
meetings with companies, these meetings also provided
that are most useful to investors. A small number ofa platform for engaging on key ESG issues already in
Korean asset managers and owners are signatories tofront of these companies. In 2012, the South Korea
PRI, and two worked with the EMDP. More areneeded.
held Markets
talks with
Korean Project,companies
exposure
Lessons Learned: Theteam
Emerging
Disclosure
2008 on– 201230 toconflict minerals and other global supply chain risks.

• The quality of the original 10 firms’ disclosures to the CDP had improved, and the companies weredisclosing more environmental metrics in comparison to 2010, as well as implementing and talking
more about their environmental management systems. However, there continued to be a disconnect
in the consistency of data points offered between years and related targets and goals, as well as thegeographic scope of each metric. For some data, the companies only offered information on Korea
operations, not facilities located elsewhere.
• The original 10 firms had improved the most on social issues, especially related to supply chains.
• On governance, separation of CEO and chair was still not widely adopted by the companies.
Some made progress in disclosing anti-bribery and corruption policies, although many fell shortof discussing how those policies were implemented and if employees had been trained on them.
The team encouraged the firms to address the shortcomings identified in their upcoming sustainability
reports and to benchmark disclosure and performance to global peers. An interesting finding thatcame to light during the 2012 engagement cycle was that inclusion in sustainable indices such as
the FTSE4Good and the Dow Jones Sustainability Index held a lot of weight with companies. It also
proved to be a useful example to companies of how sustainable investors use ESG data in theinvestment process.
In addition, the group discussed the potential implications for South Korean companies of the conflictminerals disclosure requirements related to the Democratic Republic of the Congo included in the
U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act and the California Transparency inSupply Chain Act. Specifically, the team learned that LG Electronics and Samsung were both active
members of the joint Electronic Industry Citizenship (EICC) and Global e-Sustainability Initiative (GeSI)Extractive Working Group and involved in encouraging the Korea Electronics Association and the
Korean government to more pro-actively address conflict minerals. The team suggested that Hynix
join its peers in the EICC-GeSI initiative, and it recommended to Hyundai Motors, as well as the twotelecoms, to begin to assess their own exposure to conflict minerals and to benchmark to peers.
LG Electronics had already taken these steps.
In addition, in talks with Samsung, the team encouraged the company to adopt the UN Global
Compact and to expand its human rights policy to include specific language on freedom of
association, a core International Labor Organization (ILO) convention, as well as human trafficking
and modern day slavery. Notably, Samsung was taking its first steps to disclose more on how it wasaddressing human trafficking and subsequently published a statement on its website in May 2012.
In dialogues with Korea Telecom and SK Telecom, the team also requested both to provide more
disclosure on how they were protecting customer data given the increasing material risk associatedwith privacy and freedom of expression following the Arab Spring and the backlash endured by global
competitors such as Vodafone. The group also encouraged the two telecom firms to join an industry
initiative lead by the European telecommunications companies to learn more about this issue.
Additionally, the EMDP South Korea team held meetings with the local PRI network and the National
Pension Service of Korea to provide updates on the project and to discuss how each group mightwork together to further support sustainability reporting in South Korea. In addition, representatives
from the team spoke at TBLI Asia, the Korea PRI Network Meeting, ESG Asia 2012 and other events toraise awareness of the project and its activities.
LOOKING AHEAD: The team hopes to build on the connections it made during these meetings tocontinue research and bolster engagement efforts.

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 201231

APPENDICES

A. Investor Statement on Sustainability Reporting in Emerging Markets(August 2011)
Introduction

The signatories to this statement recognize the important role corporate environmental, social and governance“ESG or sustainability” reporting plays in helping investors to determine which companies are best positioned todeliver strong, long-term investment performance. At the same time, companies increasingly understand that
effective management of sustainability challenges and opportunities can contribute directly to financial success by:• Allowing companies to reach a broader range of investors.
• Achieving greater operational efficiency.
• Improving enterprise-wide risk management.
• Making more strategic capital expenditures decisions.
• Enhancing customer loyalty and developing new customers.
• Improving brand positioning and value.
• Developing and maintaining market leadership.
However, for such actions to be properly valued by financial markets, companies must disclose
information about their ESG programs and the progress made toward meeting specific ESG business objectives.
For this reason, more than 2,300 global companies, including more than two-thirds of the constituents in the
Global FT 500, issued sustainability reports in 2008.1

Why Sustainability Reporting

Disclosing environmental and social performance data is critical to investors for evaluating:• Financial health and risk management, as this information augments financial analysis by indicating material
risks and potential liabilities that are often overlooked by general accounting standards.
• Management quality, as ESG issues management can be used as a proxy for strong corporate governance andserve as an indicator of a company’s overall management quality.
• Competitive positioning, as firms in emerging markets are increasingly competing globally and will beassessed according to their ability to comply with evolving international standards such as the European
Union’s Restriction of Use of certain Hazardous Substances Directive (RoHS) and the Waste Electrical andElectronic Equipment Directive (WEEE) regulations. In addition, home country standards are changing quickly
and creating opportunities for companies with forward looking environmental and labor policies and programs
to distinguish themselves.
• Growth potential, as there is a large and growing body of evidence indicating that companies that are proactive environmental stewards, responsible corporate citizens and strong employers are more likely to create
long-term shareholder value.

Sustainability Disclosure in Emerging Markets

As emerging market companies continue to grow in significance in the global economy, so doinvestor expectations for these companies. Emerging markets represent important investment areas, but a
1. C
 orporateRegister.com. (March 2009). CRReportingAwards ’08, Global Winners & Reporting Trends. Retrieved Feb. 16, 2010, fromhttp://www.corporateregister.com/pdf/CRRA08.pdf.

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 201232

lack of transparency can hamper potential investment. Specifically, investors often do not have enoughinformation on the manner in which companies in emerging markets have assessed and responded to risks
and opportunities related to sustainability issues—and how these risks and opportunities might affect futurefinancial performance and valuation.
In particular, the signatories to this statement encourage all companies to enhance transparency byworking toward:• Providing regularly updated ESG disclosure in financial reports or in specialized sustainability reports, focusing
on the most material business risks and opportunities.
• Setting clear sustainability goals and disclosing progress towards meeting targets.
• Using the Global Reporting Initiative (GRI) framework in preparing their reports. At a minimum, we recommendthat companies list exactly which GRI indicators are addressed in their reports as part of a “GRI Index.”• Continually improving their reporting based on feedback from key stakeholder groups, including both financial
stakeholders and non-financial stakeholders, such as employees, customers, and relevant community and civilsociety groups.
The EMDP’s most recent baseline study underscores the need for improved reporting in emerging markets.2 It
found that while 96 percent of the 100 largest emerging market companies reported on at least one ESG factor,
only 14 of the 100 declared reporting in accordance with the GRI’s guidelines, with a mere 20 making reference
to the GRI. Furthermore, of the 28 companies in the study listed as signatories to the United Nations Global
Compact, only 18 (64 percent) produced a Communication
on Progress (COP) and/or a GRI report in compliance with the Compact’s reporting requirements. In addition,
only 30 percent of the companies offered any climate-related information.

Why the GRI

We urge companies to use the GRI’s third generation, G3 Sustainability Reporting Guidelines (“Guidelines”) to
inform company reporting, and in so doing, increase the credibility, comparability, and utility of their reporting
efforts. A GRI-based report also serves as a strong “Communication on Progress” for corporate signatories of
the Global Compact.
The Global Reporting Initiative (www.globalreporting.org) is an international organization developed bybusinesses working with a broad base of global organizations. The GRI provides guidance on sustainability
reporting process and content through the GRI Guidelines, a flexible reporting system that allows companies
to focus on the issues most relevant to company operations.
More than 1,000 organizations globally currently use the GRI Guidelines in developing their sustainability reports.
In fact, of the 3,100 companies issuing sustainability reports in 2008 tracked by CorporateRegister.com,
approximately one third followed the GRI’s guidelines in issuing reports, making it the most widely used standard
worldwide.3 Similarly, KPMG found that 60 percent of the Global Fortune 250 and more than 30 percent of the
100 biggest companies worldwide by revenue used the GRI guidelines in their reporting in 2008.4

Conclusion

The signatories to this statement believe that the next generation of leading companies will distinguishthemselves through their commitment to sustainability, as demonstrated through robust sustainability reporting,
and will be correspondingly rewarded by the market.
2. Emerging Markets Disclosure Project. (December 2009). Corporate Sustainability Disclosure in Emerging Markets. Retrieved Feb. 16, 2009,
from http://socialinvest.org/projects/iwg/documents/EMDP_UNCTAD_REPORT.pdf.
3. CorporateRegister.com. (March 2009). CRReportingAwards ’08, Global Winners & Reporting Trends. Retrieved Feb. 16, 2010, fromhttp://www.corporateregister.com/pdf/CRRA08.pdf.
4. KPMG. (October 2008). KPMG International Survey of Corporate Responsibility Reporting 2008. Retrieved Feb. 16, 2010, fromhttp://www.kpmg.com/SiteCollectionDocuments/International-corporate-responsibility-survey-2008_v2.pdf.

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 201233

2011 Signatories
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.

Allianz Global Investors Korea Limited
AMP Capital Responsible Investment
Leaders International Share FundBank Sarasin & Cie AG
BâtirenteBlue Summit Financial Group, Inc.
Boston Common Asset Management, LLC
British Columbia Teachers’ Federation
Salary Indemnity FundCalvert Investments
Canadian Labour Congress Staff
Pension Fund
Christian Brothers Investment Services, Inc.
The Christopher Reynolds Foundation
Church of the Brethren Benefit Trust, Inc.
ComgestThe Co-operative Asset Management
Dexia Asset Management
DnB NOR Asset Management
Domini Social Investments, LLC
Element Investment Managers
EM Capital Management, LLC
Environmental Investment Services Asia Limited(EISAL)
Ethos Foundation
F&C Management Limited
FIM Asset Management
General Board of Global Ministries United Methodist Church
GES Investment Services
Government Employees Pension Fund of South
AfricaHenderson Global Investors, Sustainable andResponsible Investment

28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.

Investec Asset Management
Local Government Super
Local Authority Pension Fund Forum (LAPFF)
Macif Gestion
Mercy Investment Services
Meritas Mutual Funds
Merseyside Pension Fund
MMA Praxis Mutual Funds
Mn Services N.V.
Natural Investments LLC
Neuberger Berman Socially Responsive Fund
NH-CA Asset Management
Northwest & Ethical Investments L.P.
Oikocredit USA
Pax World Investments
PGGM Vermogensbeheer B.V.
PREV­—Caixa de Previdência dos
Funcionários do Banco do Brasil
Progressive Asset Management
PT BNP Paribas Investment Partners
RobecoThe Seventh Swedish National Pension Fund
(AP7)
SNS Asset Management N.V.
Trillium Asset Management Corporation
United Methodist Church General Board of Pension and Health Benefits
Vancity Investment Management
Veris Wealth Partners
Winslow Management Company, A Brown Advisory Investment Group
Women’s Division, General Board of Global Ministries United Methodist Church2011 Affiliated Supporters
1.
2.

As You Sow Foundation
Association for Sustainable andResponsible Investment in Asia (AsrIA)
3. Bloomberg
4. CAER—Corporate Analysis. Enhanced
Responsibility
5. Ceres
6. Ecoeye Co., Ltd.
7. Eco-Frontier
8. EIRIS
9. Eurosif (European Sustainable Investment
Forum)
10. FBDS—Brazilian Foundation for Sustainable
Development
11. IndonesiaWISE
12. Inrate Ltd.

13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.

Korea Corporate Governance Service
Korea CSR Research Service (KOCSR)
Korea Sustainability Investing Forum (KOSIF)MSCI
P.T. Minaca Selaras
Responsible Research
Shareholder Association for Researchand Education (SHARE)
SinCo
SolAbility
Solaron Sustainability Services, Ltd
Sustainable Investments Institute (Si2)
Sustainalytics
SUSTINVEST Co., Ltd.
VIP (Vereinigung Institutionelle Privatanleger):
Association of Institutional Shareholders

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 201234

B. EMDP Scorecard
CRITERIA

POINTS

Environment

20Greenhouse gas (GHG) emissions—publishes statement supporting scientific consensus on climate change (1 point);
discloses business analysis of risks and opportunities climate change presents to the company (1 point); reports
scope one (1 point), scope two (1 point) and/or scope three (1 point) emissions; publishes quantitative targets (1 point)

6

Carbon Disclosure Project (CDP) reporting—responded to current or previous year questionnaire (1 point);
made response public (1 point)

2

Energy consumption—discloses policies (1 point); renewable energy purchases/capacity building or green
building strategies or certifications (1 point); and quantitative targets (1 point)3

Water use—publishes policies (1 point); and quantitative targets (1 point)2

Toxic spills—reports policies (1 point); and quantitative targets (1 point)

2

Recycling—discloses policies g (1 point); and quantitative targets (1 point)

2

Environmental management—describes environmental management system, such as ISO 14001, andany associated certifications and progress on implementation (3 points)

3

Social20

Human rights standards—discloses policies on fundamental human rights enshrined in the UN Universal Declarationof Human Rights, including bans on child (1 point) and forced labor (1 point); and discrimination based on the following
race, color, sex, language, religion, political or other opinion, national or social origin (including indigenous status),
property, birth and/or other status (list to be customized by country, up to 3 points)

5

Labor rights standards—publishes policies guaranteeing freedom of association (2 points) and the right to organize or otherwise
guaranteeing these rights within the four walls of the factory in countries where such activities are prohibited (2 points)

4

Stakeholder engagement—reports framework to identify stakeholders and manage relationships (2 points); anddevelopments from dialogues with groups (2 points)

4

Health and safety—discloses policies (1 point); reports data on work-related illnesses, injuries and fatalities(1 year = 1 point, 3 years = 1 point and/or five years = 1 point; 3 points total); publishes targets (1 point)

5

Health and safety management—discloses information on health and safety management systems such as
OHSAS 18001, including associated certifications and progress on implementation (2 points)

2

Governance

20

Board independence—publishes director conflicts, including business dealings with the company

1

Sustainability oversight—discloses description of the board’s role in overseeing the company’s stewardship ofenvironmental (3 points) and social (3 points) issues

6

Separate chairman and CEO—publishes policy separating chairman and CEO positions or offers investors arationale for keeping the positions unified with a schedule for regular review and reassessment (2 points)

2

Board committees—discloses independence of nominations (1 point); audit (1 point) and remuneration (1 point) committees

3

Executive pay—publishes pay links to environmental (2 points) and social (2 points) criteria

4

Ethics/anti-corruption—discloses policy that bans bribery (1 point), coercion/extortion (1 point), fraud (1 point), andbid rigging, collusion, price fixing and other anti-competitive activities (1 point)

4

General20

Sustainability report—published in the past year (2 points) and audited by a third party (2 points)

4

GRI G3 alignment—issued a GRI report of level A+ (6 points), A (5 points), B+ (4 points), B (3 points), C+(2 points)
or C/pre-G-3 (1 point)

6

UN Global Compact—listed as a signatory (1 point)

1

Supply chain compliance discloses policies on supplier compliance with social (1 point), and environmental criteria(1 point); monitoring procedures (1 point); findings from monitoring, audit and enforcement efforts (2 points)

5

Product development—publishes guidelines on product formulations and toxicity or otherwise describes business plans
to develop products and/or services that address sustainability challenges (2 points)

2

Management oversight—reports on executives’ roles in managing environmental (1 point) and social (1 point) issues

Country-specific Indicators (determined by each country team)
Total

2

20

100

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 201235

C. Resources• Corporate Sustainability Disclosure in Emerging Markets (2009): http://www.ussif.org/projects/iwg/
documents/EMDP_UNCTAD_REPORT.pdf• EMDP Indonesia Country Report 2010, Environment, Social and Governance in Indonesia,
Positive Trends in a Challenging Environment (2010): http://ussif.org/projects/iwg/documents/
IndonesiaCountryReport2010EMDP.pdf• EMDP Indonesia Country Report 2011, Improving trends towards better ESG practices anddisclosure (2011): http://ussif.org/projects/iwg/documents/IndonesiaCountryReport2011EMDP.pdf• Emerging Markets Investor Survey Report: An analysis of responsible investment in emerging
markets (2009): http://www.ussif.org/resources/research/documents/EMDPpaper062609.pdf• The EMDP Home Page: http://www.ussif.org/projects/iwg/emdp.cfm• The Global Reporting Initiative’s G3 Guidelines: https://www.globalreporting.org/reporting/latest-guidelines/g3-guidelines/Pages/default.aspx• The Global Reporting Initiative’s G3.1 Guidelines: https://www.globalreporting.org/reporting/latest-guidelines/g3-1-guidelines/Pages/default.aspx• The Global Reporting Initiative’s G4 Draft Guidelines: https://www.globalreporting.org/reporting/latest-guidelines/g4-developments/Pages/default.aspx• A Review of ESG Practices in Large Emerging Market Companies (2009): http://www.ussif.org/
resources/research/documents/EmergingMarketsPaper_FINAL.pdf• Sustainability Reporting in Emerging Markets: An analysis of the sustainability reporting in selected
sectors of seven emerging market countries (2008): http://www.ussif.org/resources/research/documents/SIF-SIRAN-KLDReportforEMTransparency2008.pdf

Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 201236

910 17th Street NW, Suite 1000
Washington, DC 20006
tel: (202) 872-5361
info@ussif.org • www.ussif.org
US SIF Foundation, a 501c3 organization that undertakes educational, research and programmatic
activities to advance the mission of US SIF. Formerly the Social Investment Forum (SIF), US SIF is
the U.S. membership association for professionals, firms, institutions and organizations engaged insustainable and responsible investing. US SIF and its members advance investment practices
that consider environmental, social and corporate governance criteria to generate long-termcompetitive financial returns and positive societal impact. Our vision is a world in whichinvestment capital helps build a sustainable and equitable economy.
Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 201237