The public and private sectors in Taiwan have banded together to promote the emerging Western concept that running a socially responsible business and being financially wise go hand in hand.
The Ministry of Economic Affairs and the Taiwan branch of the World Business Council for Sustainable Development (WBCSD) last Friday jointly presented a conference on Socially Responsible Investment in Taipei to promote the idea of combining sustainable development with turning a profit.
Officials from the min-istry's Industrial Development and Investment Center (IDIC) said that, in an era of globalization, transnational firms would inevitably face increasing pressures from residents of the countries in which they invest, especially regarding environmental protection, employee relations, human rights and community participation.
"Taiwanese firms will have to effectively practice their social responsibilities to not only gain support from financial markets, but also profit from well-established goodwill," IDIC director general Angela Chu (瞿大文) said.
Since the late 1990s, forward-looking investment firms in some advanced countries in North America and Europe have included diverse social factors in their risk assessments. They believe that companies ignoring socially and environmentally responsible practices, such as environmental polluters and tobacco manufacturers, will tend to have greater liabilities and charges against earnings due to regulatory pressures, fines, strikes and boycotts.
"Although Western financial advisors cling to this, not too many Taiwanese firms subscribe to the belief that corporations combining positive financial and social performance make the best long-term investments," said Niven Huang (
Taiwan's government encourages manufacturers to ensure their sustainability from the angle of technology. This includes improving pollution-prevention and reducing waste. The financial market, however, can be a more powerful driving force to make industrial firms act socially responsible, Huang said.
Taking Taiwan Semiconductor Manufacturing Co as an example, Huang said it remains the only Taiwanese firm listed in the recently-released results of this year's annual review for the Dow Jones Sustainability Indexes, which track the financial performance of leading sustainability-driven companies worldwide.
Since 1999, when the indexes were launched, a growing number of private and institutional investors have regarded the annual results as one of the most influential references for evaluating the impact of sustainability issues on long-term shareholder value. It is especially useful when examining the economic, environmental and social aspects of sustainability.
Therefore, Huang said, the concept of socially responsible investment deserved to be urgently promoted in Taiwan to ensure the competitiveness of the nation's industrial firms.
Representatives of the UN Environment Program (UNEP) attending the conference said that one of the problems Taiwanese firms would have to deal with is a lack of up-to-date information.
"Successful experiences with socially responsible investment in Western countries should be more effectively introduced to Taiwan," said Jacob Malthouse, a consultant to the Finance Initiative Service Organization, which functions in partnership with UNEP.
Tessa Tennant, chair of the Association for Sustainable and Responsible Investment in Asia, said Japan and Australia have had some good experiences with socially responsible investment.
According to the association, Japan's first eco-fund appeared in 1999. As of February this year, 12 Japanese eco-funds managing assets worth about NT$21.74 billion have been available to investors. Australia's socially responsible investment market has grown by 700 percent since 1996. Its socially responsible investment market is now composed of 74 retail funds managing NT$330 billion.
But only one global Eco Performance Fund is registered in Taiwan.
Tennant said that socially responsible investment should be extensively promoted in Asia, which is home to 57 percent of the world's population.
Under current systems of production and consumption, Tennant said, at least three, possibly five planets' worth of resources would be needed if people all over the world were to enjoy the same living standards as the citizens of countries belonging to the Organization for Economic Cooperation and Development.
Although President President Chen Shui-bian (
"If the government helped to establish more local funds with a socially responsible investment concept, local industrial firms would be driven to act in an ecologically friendly way," Wu said.
Improved industry performance would give rise to fewer environmental protests, consume fewer natural resources and minimize the risk to public health, he said.
As the impact of sustainability trends on business becomes increasingly evident, the dialog on socially responsible investment between industry and the public will help to ensure sustainable development and economic growth, Wu said.
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