Emerging-market investors want more disclosure

Disclosure of specific environmental, social and corporate governance issues was seen as the major challenge facing socially conscious investors in emerging-market companies, according to a survey of institutional investors. The survey of 67 institutional investors, representing $130 billion worth of emerging-market investments, found that these investors are demanding more openness and transparency. Poor disclosure practices undermines investors’ confidence, according to the report released today by the Emerging Market Disclosure Project, an international coalition of investors and organizations working to improve disclosure by companies in emerging markets. The survey, which was conducted in April and May, was sponsored by the International Working Group of the Social Investment Forum in Washington. Other sponsors included the International Financial Corp. in Washington and The Calvert Group Ltd. in Bethesda, Md. In the survey, Brazil ranked as the top emerging market by allocation, followed by China, India, Mexico and South Korea. And distinct differences in the way socially conscious investors approach the emerging markets was also shown in the survey. European investors surveyed, for example, allocated twice as much to emerging markets as North American investors. They were also much more likely to focus on corporate governance and corruption in their investment approach, according to the report. North American investors, meanwhile, tended to favor negative screening, including tobacco, for example.