Isesi project em_8_dec2010.ppt

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SustainableInvestmentArchitects

SinCo | Sustainable Investment Architects | The Leading ESG Investment Architect in Emerging Markets | sinclairconsult.com ©2010

CONFIDENTIAL AND PROPRIETARY Any use of this material without specific permission is strictly prohibited.

ISE SUSTAINABILITY PROJECT

SUSTAINABLE INVESTMENTin EMERGING MARKETS

Graham SinclairPrincipal, SinCo

[email protected]

Istanbul, TurkeyWednesday 8 December 2010

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sinclairconsult.com

REGULATORY INFORMATIONNo part of this proposal suggests or should understood to suggest endorsement or advice on any investment approach, strategy or offering. Therights and obligations of the investor are set out in the relevant policy contract. Market fluctuations and changes in rates of exchange or taxationmay have an effect on the value, price or income of investments. Since the performance of financial markets fluctuates, an investor may not getback the full amount invested. Past performance is not necessarily a guide to future investment performance.


Sustainable Investment Architects

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Investment architect that believes sustainability + investment are integrated.Risks and opportunities for ESG appear in every investment decision.

Who We Are: Sustainable Investment Architects

• SinCo at a Glance– Bespoke investment advisory focused

on sustainable investment architecture– Architect + 2 analysts with support

team operating projects with partnersin Geneva, Seattle, London, Nairobi,Washington DC, Cape Town, Istanbul

– Word-of-mouth, below-the-radarapproach

• Philosophy– SinCo is a boutique investment advisory

firm specializing as an ESG investmentarchitect for sustainable investment infrontier and emerging markets.

– SinCo offer the domain knowledge andglobal experience to help investorsunderstand the threats andopportunities of the sustainability meta-trend.

– SinCo helps clarify questions, design &develop answers, and projectmanages thinking into action.

• Experienced– Established boutique in Boston in Q4

2006 : Inaugural engagement forWall St proprietary and third partymanager with USD 900bn AUM, 200analysts, mutli-asset classes

– Sabbatical to establish PRI inEmerging Markets Project for UNEnvironment Programme FinanceInitiative 2007/8: Rampedmembership in EM 57%

– Since 2006, SinCo has deliveredsustainable investment architectureglobally to pension funds, assetmanagers and internationalorganizations integrating ESGfactors into investment practice.

• Proven Project Leader– Multi-year, multi-stakeholder, multi-

country projects– Developed framework for 25

country rollout by PRI in EM project

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• Developed strategy for assessing innovative financing mechanisms to attract new capital in newways 2008-. Designed global ESG index architecture for developed, emerging and frontier marketscovering nutrition sector 2009-2011.

• Developed strategy for 25 emerging markets in 2007 and launched EM project for sustainableinvestment by institutional investors. Created network infrastructure, stakeholder relationships andbuilt PRI in EM through 2008.

• Conducting seminal study of sustainable investment in sub-Saharan Africa [S.Africa, Nigeria, Kenya]across PE and listed equities in 2010 in partnership with RisCura; conducting primary researchinterviewing over 1100 investors. In PE and listed asset classes inside/outside Africa 2009-2010

• Designed sustainable investment ESG architecture across trillion-dollar AUM, 200 analyst privateequity, equity, fixed income and global real estate asset classes. Provided peer benchmarking forESG strategy and developed change management program for global ESG roll-out 2006-2009.

• Supported stakeholder engagement connecting investors, analysts and companies assessing practiceof investment valuation globally in 2008

• Prepared strategy and lead the Africa Sustainable Investment Forum (AfricaSIF) project teamdeveloping pan-African network for investment stakeholders 2009-.

Who We Are: SinCo helps leading clients tackle challenges

• Chaired the Association for Savings and Investment South Africa Responsible Investment Sub-CommitteePrudential Assets Working Group developing new policies for promoting ESG in investment

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About ISE Sustainability Index

SinCo ROLE: INVESTOR STAKEHOLDERS• SinCo contracted to provide Sustainable

Investment advisory services for theprocess design, development, facilitationand implementation of a sustainabilityindex project in Turkey, the Istanbul StockExchange Sustainability Index (TBCSDISESI Project).

APPROACH• Opportunities to attract capital• Identifying winners in sustainability meta-

theme; competitive context driveschanges

• Indices will be used by investmentmanagers to integrate Environmental,Social and Governance criteria into theirinvestment processes for benchmarking,asset allocation.

TEAM• ISE seeking local and international

partners:– TBCSD/WBCSD - company initiative

promoting sustainability, Cheryl Hicks– SinCo - sustainable investment architect– SAM - ESG ratings and indexes

ARCHITECTURE• Universe of ISE-listed companies ranked

on financial fundamentals and ESGfactors e.g. energy efficiency, jobscreation, carbon footprint etc

• Index committee of Turkey /investment/sustainability experts. Third-party ratingmethod with verification, review.

KEY MILESTONES• Project launch announced @ ISE on 10

August 2010 by Presidents of ISE + TBCSD• Briefing to companies, investors and

stakeholders in Turkey on project; inputon core ESG issues, Oct-Dec 2010

– Further briefings and workshops todevelop relevant criteria.

– Regular updates and reporting online

• Criteria finalized and first annual ratingprocess begins; companies assessed onESG factors; rating agency andcompany reporting. Index model testedwith company ESG profiles based ondata/criteria/ranking

LAUNCH• Index modeled and launched by ISE +

TBCSD around Dec 2011.

ISE Sustainability Index Project 2010 - 2011 Launch BriefingIstanbul Turkey, 10 August 2010

isesi.org

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Emerging Markets Basics

• EM originally brought into fashion in the 1980s by then World Bankeconomist Antoine van Agtmael.– Political scientist Ian Bremmer defines an emerging market as "a country

where politics matters at least as much as economics to the markets".• New terms have emerged to describe the largest developing

countries– BRIC that stands for Brazil, Russia, India, and China– BRICET (BRIC + Eastern Europe and Turkey)– BRICS (BRIC + South Africa),– BRICM (BRIC + Mexico)– BRICK (BRIC + South Korea)– CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa)– Big Emerging Market (BEM) economies are (alphabetically ordered): Brazil,

China, Egypt, India, Indonesia, Mexico, Philippines, Poland, Russia, SouthAfrica, South Korea[9] and Turkey.

• Nations with social or business activity in the process of rapid growthand industrialization.

• Lie at the intersection of non-traditional user behavior, the rise of newuser groups and community adoption of products and services, andinnovations in product technologies and platforms.

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What Do Global Emerging Markets Investors Want From SustainableInvestment?

• Investment opportunities for new returns [uncorrelated?] anddiversification of risks/rewards

• Investments in EM are made with– ESG-driven mandates with filter for ESG built into mandates and/or

norms or values driven– ESG-agnostic but risk averse and prefer ESG “halo effect”– Cost-sensitive to research or execution costs; liquidity risks

• Opportunity to deliver compelling investment proposition atcountry, exchange, sector or company levels

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Company

ESGExperts

Investors

Govt

NGOConsumer

Trade Associations

Popular Media

BusinessMedia

SpecialistMedia

Primary audiences

Investor Stakeholder Mapping

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Investment context: global

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EM Investors Appetite Grows, Opportunities at Differential Rates

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EM Institutional investors: CalPERS and Dimensional/KLD

CalPERS• US's largest public 'pension fund' + retirees.

USD. > 200b AUM• Board/investment committee structure: Board

= fiduciary responsibilities & makes decisions,committee advises

• History of shareholder activism– Apartheid, tobacco & global warming

CalPERS in EMDimensional: a 'stock picking' specialist. Cf.Eugene Fama and: "There is a new model ofinvesting: a model based not on speculationbut on the science of capital markets"http://www.dfaca.com/index.shtml. USD111bAUM

• KLD Research and Analytics, Inc.: investmentresearch firm specialized in SRI and a pioneer(early 1990s) in the development of U.S. &global indexes of 'ESG acceptable'companies

• KLD provided analysis for Dimensional (e.g. forscreening on labor practices)

• KLD+Dimensional helped CalPERS implementits investment principles after 2007

• Three stages of EM investmentpolicy development:

– < 2002: ¨passive/index based– 2002-2007: permissible countries– > 2007: principles based

approach

• EM principles applied from 20071. Politically stable2. Transparency in information3. Abstinence from harmful labor

practices4. Promotion of corporate social

responsibility and sustainability5. Market regulation and liquidity6. Free market policies, openness,

legal protection7. Reasonable trading and

settlement in markets8. Appropriate disclosure on ESG

• CNOC/Petrochina: difficult toapply CalPERS' principles inChina

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EM Institutional Investors: Actis PE

• Actis• Leading private equity investor in

emerging markets. Operating for 60years

– $7.3 Bn raised, $3.1 Bn investd– Goal: to promote sustainable growth in

emerging markets to ensure “a lastingtangible and positive difference” in targetcountries.

• What is ESG code?– Guidelines, policies and methods for

monitoring the ESG approach incompanies within portfolio and underconsideration.

• Actis Five Policies– 1 – Environmental– 2 – Climate change– 3 – Health & safety– 4 – Business integrity– 5 – Social issues

• Steps to implement the ESG approach:– Policy specialization: Actis has internal

experts, advice throughout the lifecycle– Negative Screening: Specific sectors are

excluded from investment.

• Policy Impact: Actis specialists assess theimpact of all new investments in each ofthe five policy areas as an integral partof the appraisal process and determinesthe appropriate level of managementand monitoring required.

– Agreement: Company management arerequired to sign an agreement confirmingthat they will operate in line with the FivePolicies.

– Action Plan: Actis assists companies indeveloping action plans to address areasof noncompliance with policies andoversees implementation.

• Reviewing– Annual reporting on the implementation

of procedures.– Summary: Actis provides a summary of

the development impact of each fund inthe regions in which it is investing(including a statement relating to eachfund's carbon footprint).

• Auditing– Ongoing Auditing: Actis audits the

implementation of the Actis Five Policiesand related procedures on an ongoingbasis.

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• Global SI Market Snapshot

• SI in Europe

• SI in the United States

• SI in Emerging Markets

• Brazil• India

Contents

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2006

2008

Global SI Market is Growing and Regional Influence is Shifting

2010

Source: Eurosif Research

Global SI Market Snapshot

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• Global SRI Market Snapshot

• SRI in Europe

• SRI in the United States

• SRI in Emerging Markets

• Brazil• India

Contents

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SRI in Europe: Market Size

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* Re-calculated according to the 2010 Core SRI definition


Total EU SRI assets under management have reached€4.986 trillion as of 31/12/09

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SRI in Europe: Market Characteristics

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Core strategies consist of norms- and values-based exclusions as well as different types ofpositive screens (Best-in-Class, thematic funds andothers).

Norms- and values-based exclusions are the mostpopular Core strategies in Europe, driven by theNetherlands and Nordic countries.

Broad strategies consist of simple exclusion,engagement and integration, often in combinationwith one another.

Integration, the inclusion of ESG risk into traditionalfinancial analysis, is gaining ground with someEuropean investors, encouraged by the PRI Initiative.

Core SRI - €1.2 trillion Broad SRI - €3.8 trillion


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SRI in Europe: Market Drivers / Barriers

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Demand from institutional investors remains a key driver, along withinternational initiatives, external pressure and demand from retail investors.


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• Global SRI Market Snapshot

• SRI in Europe



• Brazil• China

• India

• MENA region

• Sub-Saharan Africa

Contents

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SRI in the United States: Market Size

• “Sustainable and socially responsible investing (SRI) in the UnitedStates has continued to grow at a faster pace than the broaderuniverse of conventional investment assets under professionalmanagement.”

• “At the start of 2010, professionally managed assets following SRIstrategies stood at $3.07 trillion, a rise of more than 380 percent from$639 billion in 1995, the year of the Social Investment ForumFoundation’s first Trends Report. Over the same period, the broaderuniverse of assets under professional management increased only260 percent from $7 trillion to $25.2 trillion.”

• “As a result of this growth, nearly one out of every eight dollars underprofessional management in the United States today—12.2 percent ofthe $25.2 trillion in total assets under management tracked byThomson Reuters Nelson—is involved in some strategy of sociallyresponsible investing.”

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Source: Social Investment Forum Foundation. “2010 Report on Socially Responsible Investing Trends in the UnitedStates.”

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SRI in the United States: Market Size

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Source: Social Investment Forum Foundation. “2010 Report on Socially Responsible Investing Trends in the United States.”

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SRI in the United States: Market Characteristics

• “The total assets managed under policies that explicitlyincorporate ESG criteria into investment analysis and portfolioconstruction (ESG assets) are valued at $2.51 trillion.

– Of these ESG assets, $691.9 billion were identified within specificinvestment vehicles managed by money managers, while at least$2.03 trillion were identified as owned or administered byinstitutional investors.

– Of the institutional ESG assets, $206.3 billion were managedthrough investment vehicles captured in research on moneymanagers.”

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Source: Social Investment Forum Foundation. “2010 Report on Socially Responsible Investing Trends in the UnitedStates.”

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SRI in the United States: Drivers and Barriers

• “Over the past decade, SRI growth within US financial markets has beenshaped by numerous trends:– Money managers are increasingly incorporating ESG factors into their

investment analysis, decision making and portfolio construction, awakening tothe demand for ESG investing products and services from institutional andindividual investors. Of the managers that responded to survey questions ontheir reasons for incorporating ESG criteria into investment management, more(85 percent) cited client demand than any other reason.

– Institutions—particularly public funds—are incorporating ESG criteria in partbecause of legislative mandates. Among the institutions that responded tosurvey questions about why they incorporated ESG factors into theirinvestments, more (52 percent) cited regulation or legislation than any otherreason.

– New products and fund styles are driving growth in ESG investment vehicles,especially among ETFs and alternative investment funds such as social venturecapital, double- and triple-bottom-line private equity and responsible propertyfunds.

– Environmentally themed investment products and services are rapidlyemerging to meet growing investor desire to manage environmental risks andseize opportunities in clean and green technology, alternative and renewableenergy, green building and responsible property development, and otherenvironmentally driven businesses.”

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• SRI in Europe



• Brazil

• India

Contents

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SRI in Emerging Markets: Market Size

• “(Although) further research on the business case is welcome, the twosurveys show that the majority of asset owners, fund managers andemerging market corporations are already convinced of the link betweenESG behaviour and superior investment results.”

• “Asset owners – arguably the most influential participants in the investmentvalue chain – were more inclined to agree with the statement “ESG issuesare an important part of our research, portfolio management andmanager selection process” in 2009 than in 2007. Approximately 46%strongly agreed with this statement in 2009, up from 36% in 2007.”

• 82% of surveyed asset owners say that ESG assessment will becomesignificantly more important in their research, portfolio management andmanager-selection process over the next three years.”

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Source: International Finance Corporation (IFC). “Sustainable investing in emerging markets: unscathed by the financial crisis.”

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SRI in Emerging Markets: Drivers/Barriers

• “Seen from a policy perspective, the pressure to improve corporate disclosure iskey to moving forward on sustainable investing. Most emerging markets havemade significant progress in improving corporate governance. Nevertheless,corporate governance advocacy programs could do more to help investors andissuers understand the value of transparent ESG reporting.”

• “Finally, in both the 2007 and 2009 surveys, asset owners highlighted a scarcity ofemerging-markets ESG talent among consultants and fund managers. This gaprepresents an opportunity – one that a number of investment banks, dataproviders and securities research organisations are moving to exploit. And there islittle doubt that this lack of capacity will be needed: 82% of surveyed asset ownerssay that ESG assessment will become significantly more important in their research,portfolio management and manager selection process over the next three years.

• The same group expects to increase emerging-market allocations by about 2%over the same period. The institutions at the top of the value chain are ready tomove forward – and the advisors, managers and consultants who support themhave received a mandate to help.”

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• SRI in Europe



• Brazil

• India

Contents

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SRI in Brazil: Market Size & Characteristics

• “Sustainable” investment could therefore be atleast 10 per cent of market cap. Taking aconservative approach, TERI‐Europe believesan estimate of US$40 billion (<7 per cent of totalmarket cap) may be more useful forcomparative and decision‐making purposes.”

• “Today, ten asset managers offer retail SRIfunds with combined assets undermanagement of about US$315 million.”

• “18 pension funds have signed the UN Principlesfor Responsible Investment (PRI). Together theyrepresent combined assets of US$110 billion, orabout 60 per cent of the country’s total pensionfund corpus.”

• “TERI‐Europe has used a working assumptionthat ESG investment styles account for about 1per cent of foreign portfolio investment andinvestment in Brazilian ADRs, i.e. approximatelyUS$2.2 billion.”

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Source: International Finance Corporation (IFC). “Sustainable Investment in Brazil 2009.”

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SRI in Brazil: Drivers and Barriers

– “Brazil has an advanced framework of environmental legislation andinspection at both the federal and state levels (see box). However,enforcement standards vary from state to state and between federal andstate agencies for reasons ranging from lack of resources to the influenceof corruption. In addition to federal and state environmental protectionagencies, federal and state public prosecutors are able to takeindependent action to deal with environmental problems, and do sofrequently and effectively.”

– “60 per cent of the country’s pension fund assets are already managed byUNPRI signatories.”

– “Brazilian companies have a relatively long tradition of non‐financialdisclosure. The current emphasis in Brazil is on voluntary GRI reporting.”

– “A growing number of Brazilian companies are producing annualsustainability reports, many using the Global Reporting Initiative (GRI)guidelines.”

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Source: International Finance Corporation (IFC). “Sustainable Investment in Brazil 2009.”

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• SRI in Europe



• Brazil

• India

Contents

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SRI in India: Market Size

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Source: IFC & Teri Europe. “Sustainable Investment in India 2009.”

“TERI-Europe estimates that the total stock of investment in Indian equitieswhere the investment strategy includes a strong focus on environmental,social and governance (ESG) considerations is approximately US$1 billion atthe current time. This is almost entirely composed of investment by foreigninstitutional investors (FIIs).”

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SRI in India: Market Characteristics

• “India has limited domestic sustainable investment market orinfrastructure in the listed equity space.”

• “The country’s first and so far only retail SRI mutual fund was launched byABM AMRO in March 2007 and raised the equivalent of approximatelyUS$12 million.”

• “In contrast to the situation in the listed equity market, there is a growinginterest by the private equity industry in India to exploit opportunities inthe sustainability space. The growth of PE funds in general and venturecapital in particular is encouraging from a sustainability perspective sincethe ownership structure of this asset class has the potential to ensure thatESG issues can be successfully integrated into management systemsprovided of course that there is a willingness to do so.”

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SRI in India: Drivers & Barriers

• DRIVERS:– ESG transparency and disclosure by Indian companies in the form of

corporate sustainability reports and responses to the Carbon DisclosureProject are slowly improving, but from a very low starting point.

– There is relatively strong and growing interest in ESG risks and opportunitiesamongst India’s Foreign Institutional Investors.

– There is a growing interest by the private equity industry in India to exploitopportunities in the sustainability space.

• BARRIERS:– There is little interest in sustainable investment in India’s rapidly growing

mutual fund and life insurance market at the current time.

– The enabling environment for sustainable investment in Indian listedequities is currently weak.

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Source: IFC & Teri Europe. “Sustainable Investment in India 2009.”

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• SRI in Europe



• Brazil

• India

Contents

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Sources: 1. The Relevance of Socially Responsible Investing to Research Analysts and Financial Markets, Julie Hudson, CFA, Managing Directorand Analyst, UBS, Frank K. Reilly, CFA (Moderator), University of Notre Dame, Recorded on 21 May 2006, Presented by CFA Institute, 2.

Environmental, Social, and Governance Factors at Listed Companies: A Manual for Investors, CFA Institute Centre for Financial MarketIntegrity, September 2008. 3. The Compensation of Senior Executives at Listed Companies: A Manual for Investors, July 2007.

Defining SI/ESG space: both investor and investee perspectives

• Investment perspective looking toward investment opportunities…– …Responsible Investment is an active asset management approach that takes

financial, fundamental, and also environmental, social, ethical, and governance issuesinto account in the implementation of investment decisions.

– …Definition of SI/RI/ESG/extra financials: Factors which are likely to have at least long-term effect on business results but which seldom get integrated into traditional financialanalysis. These factors can include, but are not limited to; IP, human rights,occupational H&S, R&D, customer satisfaction, corporate governance, climatechange and sustainable energy and other E&S impacts.

• Corporate perspective looking toward investor opportunities…– Environmental, social, ethical, and governance issues are embedded in any firm's

corporate strategy. Anything that affects a firm's business model can also affect thefirm's financial performance and therefore its valuation…these issues are no exception.

• CFA Institute papers on ESG:– 2007 The Compensation of Senior Executives at Listed Companies: A Manual for

Investors helps investors understand how boards develop and decide oncompensation systems for the individuals hired to manage these companies.

– 2008 Environmental, Social, and Governance Factors at Listed Companies: A Manualfor Investors addresses key, non-financial risks and opportunities that investors mayconfront, and suggests ways to evaluate these issues. Focuses on the legislative andregulatory, legal, reputation, and operational ESG risks and opportunities shareownersneed to consider to fully understand investee companies…incorporating those risks oropportunities into the analysis process.

Fund strategy determines for whom sustainability must be defined globally and locally.

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0%

10%

20%

30%

40%

50%

60%

70%

% re

spon

se

Lack ofcompany

ESGdisclosure

Language CorporateCulture

Lack ofinvestment

research

Localmarketaccess

Other

Countries identified making mostprogress towards ESGdisclosure

1. Brazil2. South Africa3. China4. South Korea5. India

Key drivers for improved ESGdisclosure

• Development of nationalsustainability indices

• ESG listing requirements• Influence of global

standards and norms

Moving forward……• Poor ESG disclosure

undermines investorconfidence

• Communication needs toimprove in both directions

• Companies need feedbackon ESG efforts

• EMD Project coordinatesand supports EMengagement

0%

10%

20%

30%

40%

50%

60%

70%

80%

% r

espo

nse

Lack ofcompany

ESGdisclosure

Language CorporateCulture

Lack ofinvestment

research

Localmarketaccess

Other

North America (n=20) Europe (n=20)

Notes: Emerging Markets Disclosure Project (EMDP) 2009 survey assessed SRI in emerging markets: n=67 respondents; representing over USD130 bn AUM;55% asset managers; years experience in EM. Source: EIRIS Senior Research Analyst Sonia Wildash presentation to SIRAN 21 July 2009, © EIRIS

Key challenges to EM investing

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What Do Global Emerging Markets Investors Want From SustainableInvestment?

• Investment opportunities for new returns [uncorrelated?] anddiversification of risks/rewards

• Investments in EM are made with– ESG-driven mandates with filter for ESG built into mandates and/or

norms or values driven– ESG-agnostic but risk averse and prefer ESG “halo effect”– Cost-sensitive to research or execution costs; liquidity risks

• Opportunity to deliver compelling investment proposition atcountry, exchange, sector or company levels

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sinclairconsult.com



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Credentials: testimonials for SinCo…

• “Graham is an exceptional professional in all that he does. His work is at the crossroads ofbusiness intelligence, finance and investments and sustainability. His ability to clarifyobjectives and execute on solutions has demonstrated the fruitful success of the businesscase for sustainability.”

– Director and Senior Investment Analyst, global institutional asset manager, New York City.

• Graham served as a strategic adviser to a large US Asset manager as we worked together ondeveloping their sustainable investment strategy. He provided on-going support to theirinternal team and served as a knowledgeable and helpful sounding board as their staff triedto move sustainability forward

– - Senior Client Relationship Manager, Global ESG ratings and research provider, London• Graham is a very focused, passionate and results driven promoter and believer in the change

role that a shift to of Responsible Investments can and will effect in our globalising world. He iscomfortable with holding a strong opinion yet cable of being a consensus builder

– - Portfolio Manager, Responsible Investment equity portfolio, Cape Town.• "For many investors, getting to grips with ESG issues in emerging markets is a top priority. [He]

was crucial in encouraging new partnerships in diverse markets..."– Clean tech private equity fund manager and former Executive Director, ASRIA, Hong Kong.

• Graham has shown a fantastic drive and commitment to the PRI initiative. He clearly helpedpromote the ESG thematic to the top of our priorities.

– - Chief Risk Officer, hedge fund-of-funds investment house, Zurich.• "Graham is one of our leading thinkers on SRI. The work that Graham is doing will transform SRI

and take it to the next level."– Managing Director, equity investment manager, Boston.

• "Graham Sinclair's work is excellent."– Executive Diretor, billion-dollar global foundation, Philadelphia.

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About Graham Sinclair

• Graham Sinclair is a sustainable investment strategist, ESG architect and globalproject leader at Sinclair & Company [SinCo]. Graham has eight yearsspecialist experience in sustainable investment globally after eight years inpensions consulting and investment banking in Africa. Recent consultingengagements in sustainable investment include:

– Leading IFC-funded research into private equity and liquid equity ESG strategies in sub-Saharan Africa in South Africa, Kenya and Nigeria to be published in Q2 2010.

– Developing innovative financing mechanisms strategy and ESG index architecture fordeveloped, emerging and frontier markets for a Swiss-based international organization.

– For a global institutional investment firm in New York with a USD 1 trillion AUM portfolio,designing ESG architecture across private equity, liquid and global real estate portfolioscovering philosophy and process innovations and investment strategies.

– As consultant to the UN, developed strategy for 25 emerging markets and launched PRIin Emerging Markets project in Q3 2007 for UNEP FI, creating a network infrastructure,building relationships with 108 investor stakeholders including in Africa through 2008.

– Lecturing on ESG in investment strategies at investment practitioner symposia andleading business schools in Europe, Africa and the US. Currently developing casestudies on ESG investment in emerging markets for his forthcoming book.

• Before starting his eponymous investment advisory boutique SinCo in 2006, hewas Product Manager at KLD Research & Analytics, Inc, based in Boston. He isa former contributor to the CSR Initiative at Harvard Kennedy School,Distinguished Member of Net Impact, alum of WWF One Planet Leadersprogramme and the Tallberg Forum New Leaders Program. He holds diplomasin retirement funds and insurance law, and in 1998 he was one of the youngestever dual-FILPAs. He currently leads the AfricaSIF Project building a not-for-profitAfrica Sustainable Investment Forum network.

• Graham earned his MBA on scholarship at Villanova University USA where heco-managed the Arnone-Lerer SRI Fund equity portfolio in 2004. He holds aB.Com from the University of Natal and LL.B from its Howard College School ofLaw as well as numerous industry specialist certifications.

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Roselyne Yao is an Analyst at the sustainable investment architecture firm SinCo, where sheconducts sustainable investment strategy research and analysis.

Roselyne joined SinCo in October 2010 as Analyst on the IFC-commissioned research project,Sustainable Investment in sub-Saharan Africa 2010. She previously was a Research Analyst for JPSGlobal Investments (a California-based money management company focusing on sustainableinvesting) and an Intern for the Social Research and Advocacy team at Walden Asset Management(a Boston-based socially responsible investing company).

Roselyne is also an AfricaSIF Steering Committee member.

Roselyne passed the CFA level I exam in June 2009 and plans to sit for the CFA level II exam in June2011. She holds a Master in Business Administration (with a double concentration in Finance andMarketing), a Certificate in Global Business Culture, and a Certificate of Excellence in SustainableManagement and Technology from the University of Illinois. She currently resides in Dakar, Senegal.

About Project team: Roselyne Yao

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SinCo vision of the world tomorrow

“Together, we can partner on behalf of our planet and prosperity and help countries increaseaccess to power while skipping - leapfrogging - the dirtier phase of [invest]ment”.

- Barack Obama, 44th president of USA in address to Ghanaian parliament, Accra, 11 July 2009

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Source: SinCo adaptation from Goldman Sachs Investment Research, March 2009 1

Urbanisationaccelerating

New technologies

Reducedavailability of creditClimate change

Consumer marketsdiverging

New sources ofcapital

BRICs competitors

Natural resourceconstraints

Infrastructureinvestment

Human capitalshortages

Healthcare systemsstrained

The world is changing morerapidly than ever before…

Goldman Sachs Research GSSustain philosophy is used to identify sustainablealpha in a changing world, focus on emerging sectors; emerging industries.

Marketplace: ESG/SI trends, new drivers of supply and demand

Political case: whatare legislators andregulators drivingcompanies and

projects toward infrontier/emergingmarkets today?

Business case: whereare leading firms

positioning forcompetitive

advantage in ESGissues today for futuremarket leadership?

Moral case: whathave business and

civic leaders identifiedas worthy of actiondespite the current

economicarguments?

Where do wefind FUNDphilosophy

stacking up in2010?

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Contact Details

Graham [email protected]+27.82.712.1925 | +1.484.802.9908

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SAMPLE: Investor Workshop Key Questions

• DEFINITION:

– How does the EM investor/investment stakeholder define “sustainableinvestment” in Turkey?

• ESG IMPORTANCE:

– What environmental, social and governance (ESG) issues are important toEM investors?

• CONTRAST:

– What similarities and differences between international vs local investorshave regarding investing in EM?

• EXAMPLES:

– What examples of ESG issues impacting investments or marketcapitalization [e.g Enron-corporate governance or BP-environmentaldisaster] are famous in EM in the past 20 years, and what lessons haveinvestors learned?

• DRIVERS/BARRIERS:

– What do you think are the main reasons why investors in EM today DO orDO NOT include environmental, social and governance (ESG) factors intheir investment decisions.

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Isesi project em_8_dec2010.ppt