Each week Emerging Markets ESG publishes an interview entitled, “Five Questions about SRI.” The interview features a practitioner’s insights about SRI in emerging markets and through Emerging Markets ESG shares this expertise with a wide global audience. The goals of Five Questions about SRI are fourfold:
- To reflect on what SRI in emerging markets means to practitioners;
- To collect a catalogue of examples of SRI in practice in emerging markets;
- To raise awareness about SRI in emerging markets; and
- To enable SRI practitioners in emerging markets to network with peers around the world.
This week’s interview is with Jerome Tagger, Chief Operating Officer, Principles for Responsible Investment (PRI).
Jerome Tagger is the outgoing Chief Operating Officer of the Principles for Responsible Investment, where he has been officiating since 2006. In his role, Jerome has overseen day to day operations, and played roles in outreach and implementation support. Previously, Jerome was Head of Research at Eurosif, the European Social Investment Forum, where he led the first comprehensive European surveys of SRI markets, supervised the publication of investor toolkits on Responsible Investment and Active Ownership, and piloted work on transparency guidelines. Jerome is a graduate of ESSEC Graduate School of Business, France.
Emerging Markets ESG: How would you define socially responsible investment (SRI)?
Jerome Tagger: SRI is investment processes that integrate considerations of environmental, social, and governance (ESG) issues. At the PRI we have focused on areas where ESG issues can have a material impact on the performance of investment portfolios – usually described as “Responsible Investment” (RI), rather than SRI.
Emerging Markets ESG: What distinguishes SRI from mainstream investment?
Jerome Tagger: Sticking to RI rather than SRI: if anything, Responsible Investors lean towards having a more long term and holistic approach to investment. This allows them to give full consideration to the possible impacts, risk and opportunities associated with ESG issues across their investments. That said, many mainstream investors adopt long term and holistic approaches without quite embracing the ESG concepts, and most responsible investors have a significant margin of progression!
Emerging Markets ESG: Which extra-financial theme – environmental, social or governance – is the most challenging for emerging market companies to manage?
Jerome Tagger: I don’t think there is a straightforward answer to that. But environmental challenges and resource scarcity are recurring themes. This may be because many emerging market countries have vast natural resources.
I also think a challenge for emerging market companies is that they are dealing with many foreign-based investors, whose ability to grasp the specificities of ESG issues in remote or small markets may be hampered by distance resource constraints. That said, some of these issues are global in nature (take climate change) and in this context investors and companies overall would benefit from more dialogue on these matters.
Emerging Markets ESG: Which extra-financial theme – environmental, social or governance – is the most challenging for investors in emerging markets to analyze?
Jerome Tagger: Probably social, because it encompasses many issues that are local in nature. But investors tell us the main issue with analysis is availability of data and the lack of disclosure.
Emerging Markets ESG: What role do emerging markets play in the Principles for Responsible Investment (PRI)?
Jerome Tagger: Both a leading and a growing role. Leading because countries such as South Africa or Brazil feature among the strongest signatory networks. Also simply because emerging markets are at the center of many PRI signatories preoccupations due to the importance of their natural resources and growing economies. Growing because as a global organization the PRI is conscious that its success is linked to its ability to have an impact across markets and will in the future have to increase its presence in many emerging markets, for example China and India. But we also have space for improvement in developed markets.