Tundra promotes SL as a sustainable investment destination

Swedish Tundra promotes SL as sustainable investment destination TISL to monitor top corporate political donations

By Ishara Gamage

Tundra Fonder, an independent Swedish boutique asset manager, specializing in frontier markets, yesterday said they were willing to promote Sri Lanka as a Sustainable Investments Destination for Socially Responsible Investing (SRI).
Addressing the CSE- Tundra Fonder Sustainability Forum in Colombo, Tundra Fonder’s Chief Investment Officer/Founding Partner, Mattias Martinsson yesterday said that global investors were ready to invest in Environmental Social and Governance (ESG) standards and SRI-based companies.

“Even though Sri Lanka has a liquidity crisis in the capital market, global investors were ready to invest in ESG and SRI compatible stocks for much more secure investments. Currently, globally ESG and SRI compatible funds were growing at over 16.5% a year, over twice the 8% rate for other funds”, he said.

Sustainable investments mean that the environment, social issues and corporate governance is taken into consideration.
“For Tundra, the decision to implement ESG issues on the investment process is based on a commercial perspective. Tundra has made the assessment that corporate behaviour in sustainable issues will have a substantial impact on their long-term competitiveness and should hence be taken into consideration in the investment process”, Martinsson asserted. According to him, Companies that do not comply with ESG and SRI might face severe difficulties in the future to attract investors.

Tundra Fonder is also a US$ 400 million fund and its Sri Lankan portfolio is around US$ 20 million or 12% of their total investment portfolio.

He said Sri Lanka was among their core countries with the highest exposure to international interest rates, with a relatively high share of Government debt FX denominated (ca 35% of GDP).

But he said Sri Lanka as a services-driven economy has a great potential in tourism and trade sectors.
Since 2013, they have invested in nine of Sri Lanka’s sustainable-related companies, such as Cargills (Ceylon) PLC, Access Engineering, HNB and the Commercial Bank, to name a few.

According to their website Tundra is one of the few asset managers worldwide, to have a dedicated team engaged in sustainable research and dialogue with frontier market companies. The team is based at Tundra’s research office in Karachi.
“We also have a unique chance to follow corporate behaviour locally,” Martinsson said.
They also tied up with several Sri Lankan governmental, non-governmental and civil society organizations to enhance and monitor the Sri Lanka’s ESG and SRI-based investing.
According to him most of the Sri Lankan top-listed companies were well complied with required ESG and SRI standards but a little bit more work had to be done with some others, so that they comply with these standards.

“Apart from our In-house ESG Research Team and external screening consultants, Sri Lankan governmental, non-governmental and civil society organizations will act as whistleblowers or ethical and environmental, social and governance standard setters of the Sri Lankan business community”, he remarked.

Since Autumn 2016, all Tundras’ funds screened for violations of international conventions and guidelines from UN Global Compact, OECD and the ILO . The Tundra Sustainable Frontier Fund is based on ESG .

Speaking at the Forum, Transparency International Sri Lanka (TISL), Executive Director, Asoka Obeyesekere said they have a plan to introduce new Anti Corruption/ Anti-Bribery accounting reporting standards to Sri Lanka’s top 50-listed companies.
“According to our proposed reporting standards, Companies must disclose all their bribery-related political motivated transactions and events. Soon we will reveal our evaluation mechanism to the public”, he said.

He said most of the Sri Lankan top Corporate Annual Reports were hiding their underhand deals such as bribery and politically-related transactions.