SRI-KEHATI Index: 25 companies which do their business in sustainability ways

Profit is generally seen as the main goal of investors. However, they are starting to realize that profit may not always be the most appropriate target. The concept of sustainable responsible investment, or SRI, which takes into consideration environmental, social and corporate governance criteria, is gaining popularity.

Yayasan KEHATI, an NGO focused on biodiversity in Indonesia, together with the Indonesia Stock Exchange (IDX) had built a bridge between investors and activists, a platform for them to communicate and better understand each other: They launched the SRI-KEHATI Index in June 2009. This is the first index of its kind in Southeast Asia.

The SRI-KEHATI Index is a stock index comprising 25 stocks listed on the IDX, and the objective of its establishment is to raise awareness of and consciousness toward biodiversity, among the public at large, and the business sector and capital market in particular. Also, it aims to provide people with information about the degree to which various companies do their business in sustainable ways.

KEHATI has picked 25 companies that meet its sustainability criteria. The presence of these companies on the list will be evaluated twice a year, in April and October, and the result will be publicized by the IDX.

The SRI-KEHATI Index’s strong performance has attracted interest from professional fund managers in Indonesia, who have started to develop mutual funds products based on this index. This means the index provides a valuable tool for those investors who believe in the concept of doing good while doing well — including companies interested in investing funds set aside for corporate social responsibility uses.

Once a listed company becomes aware of the fact that the investment-community is closely following the companies listed in the SRI-KEHATI index, they will certainly try their best to be listed as well, as it will be very rewarding to have their stocks be included in this sustainable “investment-grade” list. Sooner or later, this will lead to business practices, because more and more companies will need to become more sustainable.

 

ALLCOT