May 5, 2008
Tomorrow the first sustainable equity fund focusing on Eastern Europe will be presented by Limestone Investment Management, Estonia, at the European Summit on Corporate Governance and Responsible Investment in Copenhagen. The fund – Limestone New Europe SRI – is based upon analysis from GES Investment Services, which thereby enters a new important market overlooked by the SRI community.
Socially Responsible Investing (SRI) is most often associated with European developed markets, but Limestone Investment Management and GES Investment Services are convinced that it is time to widen the perspective.
“The markets of Eastern Europe now offer a new opportunity for investors who want to maintain their ethical standards” says Veronika Juchnewitsch, Head of SRI Investments in Limestone Investment Management. “We see in our home market a fertile ground for corporate social responsibility to flourish – structural reforms, required or expected compliance with EU regulations and improved access to capital through socially responsible thinking, are significant drivers for the growth of more sustainable business practises in Eastern European companies.”
“Since we established our Research Centre in Poland in 2004, we have been anticipating this development for quite some time. We have increased its resources significantly during the last year and it will now play a strategic role in GES’ further expansion on this market”, says Magnus Furugård, President and Managing Director of GES Investment Services
According to Limestone, investors are increasingly recognizing these new opportunities and the fund Limestone New Europe SRI has been developed in direct response to client demand. It will be launched in June as the first Eastern Europe ex Russia equity fund following the SRI principles. The fund will comprise of companies that are based in, conduct business or production operations in, or are in any other way related to Eastern European countries of former socialist block and other former member states of the Soviet Union, including but not limiting to: Czech Republic, Hungary, Estonia, Latvia, Lithuania, Poland, Slovakia, Slovenia, Bulgaria, Romania, Croatia, Albania, Bosnia and Herzegovina, Macedonia, Serbia, Montenegro. The size of the investment universe is approximately 250 companies.
The fund will seek to avoid investing in equities of companies that receive significant revenues from producing alcoholic beverages, tobacco, military weapons or are involved in the gambling business. However, other negative qualitative screens will not be applied, as the fund seeks to engage with companies to improve poor environmental and social risk ratings rather than eliminate future potential investment targets.
“We believe that forward thinking responsible companies will gain competitive advantage, since they are better placed for growth, and have better access to capital and we think that they will therefore deliver above-average returns to investors. Through detailed analysis and by actively engaging with companies to promote social responsibility, Limestone will not only be able to be a successful investor in the region, but also will be the initiator of change towards moving to a more sustainable Eastern Europe”, says Veronika Juchnewitsch.