June 24, 2014
GES’ screening of MSCI Developed Markets and MSCI Emerging Markets indices has highlighted a recent increase in the number of companies with Burma activities. Additionally, 113 of these companies are involved in activities classed as high risk. GES’ proactive engagement with a focus on Burma provides investors with an opportunity to get involved in addressing companies with such elevated risk profiles.
Myanmar, or Burma, continues to attract more international companies. Some of the largest oil companies in the world are eager bidders for oil and gas exploration concessions in Burma and the inflow of money opens new opportunities in large scale infrastructure projects in collaboration with the Burmese government. Additionally, more than 60 million Burmese people constitute a rare new market for the fast moving consumer goods segment and other consumer product companies.
For over six years, GES has biannually screened MSCI Developed Markets and MSCI Emerging Markets indices for Burma activities. In the past six months, the number of companies operating in Burma has increased from just over ten per cent to twelve per cent of the universe. 113 of these companies are considered to be involved in high risk activities in Burma, where the companies risk becoming associated with human rights violations due to the country’s lack of governance and regulation, disputed land rights, ongoing ethnic conflicts, and widespread corruption. Transparency International ranks Burma the 20th most corrupt country out of 177.
Despite the positive development in Burma/Myanmar, where the military has transferred the power to a semi-civilian government and democratic reforms have gradually been introduced, the risks of doing business in the country are still substantial. The military is still “keeping a firm hand on the steering wheel”, and basic human rights, as well as law and order, are not yet in place to ensure a reasonable governance structure, political rights and civil liberties.
GES engages proactively on behalf of investor clients with companies involved in high risk activities in Burma. Seven key performance indicators have been identified based on, among others, the UN Guiding Principles on Business and Human Rights and the UN Global Compact’s Guidance on Responsible Business Practices in Conflict-Affected & High Risk Areas. In the second half of 2014, GES engagement managers will visit Burma to engage with the companies onsite and assess first-hand the risks that businesses face in the country.
For further information, please contact:
Linda Björk, Senior Engagement Manager
Charlotte Mansson, Senior Key Account Manager
Martin Pitura, Managing Director, GES Poland, and CFO, GES International
Palle Ellemann, Client Manager Denmark and Product Manager
Patrick Wirth, Managing Director, GES Switzerland