Church investor eyes Chinese marketSeptember 2008
A leading Christian–based socially responsible investment house has signalled that it will begin engagement with Chinese companies on environmental, social and governance issues.
Ecclesiastical Investment Management, which provides investment advice to the Ecclesiastical Group, says the abuse of human rights in China must be fully considered when investments are made in the country, but that it is willing to enter the market. In a new report on the country it says human rights are severely curtailed because China is a ‘one-person state’ and the Communist Party has a strong grip on the military and the judiciary.
Thanks to poor compliance and enforcement, many state regulations, such as the minimum wage and statutory working hours, are flouted. The report criticizes the state ownership of many companies because this leaves managers with little incentive for enterprise, causes inefficiency and hinders the operation of corporate governance.
However, the document also lists good reasons for investing in China. The country has experienced a sixfold increase in manufacturing output since 1990, making it the third largest producer after the US and Germany; China will overtake the US as the largest exporter by 2010; and foreign direct investment has increased 20-fold since 1990.
Ketan Patel, Ecclesiastical’s senior socially responsible analyst, said: ‘With China now the world’s fourth largest trading nation and foreign companies accounting for more than 50 per cent of Chinese exports, to ignore its profit potential would be foolish.
‘As SRI investors, it is essential that Ecclesiastical invests in companies that are raising the ethical benchmark in China, and we believe the time is now ripe for engagement. It is one way to influence the country positively and strengthen the integrity of the global supply chain. Companies that have a positive impact on the environment and on communities should be seen as viable investments. Those that support the state should be avoided.
‘Thanks to 20 years in the ethical market, Ecclesiastical has the experience to ask the right questions and ensure that all our investment decisions are sound.’
UK-based Ecclesiastical is, among other things, the largest insurer of Anglican churches, and is also well established in charity insurance.
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