Interview: Eric Mookherjee - ESG & Emerging Markets
Mis à jour : 22 juin 2020
After having addressed the concern of why sustainable finance is a must in our first articles (Consciousness versus volatility? and A bright future!), we give voice to the men and women contributing to the "empowerment" of finance.
For our first in this series of interviews, we talk to Eric Mookherjee, founding partner at Siddhartha Asset Management and founder of PrimeRadiant. A specialist in asset allocation and emerging markets, Eric has been a fund manager for over 30 years. He has also been CIO for more than 15 years.
Why an ESG approach?
In reality, the issue of fair and sustainable development is not new. We can recall, during apartheid, the boycott of South Africa by American investors. The struggle of NGOs and men of good will is not enough; the weight of capital must be added to tip the balance. There is still a long way to go, and green-washing is better than nothing - at least in the beginning.
More than 10 years ago, when my management company had a research office in India, we already oriented our funds and analyses according to ESG criteria.
However, it was very difficult at the time to discuss these issues with company managers.
For example, when we asked an ultra-competitive tyre manufacturer how it dealt with the waste from its highly polluting business, we had no answer. Similarly, when we spoke about access to healthcare for the workers of a textile company, the interlocutor closed up, including afterwards on financial issues.
How do you do ESG today?
Siddhartha Asset Management, the company I co-founded in Singapore with long-time partners, relaunched an emerging fund six months ago with Sanso IS, one of the French leaders in the domain (Siddhartha Sustainable Emerging Equities). ESG is now much more present in the dialogue with companies. The recurrence of these questions from an investor is understood. What is not changing is the extraordinarily diverse reality of the emerging world.
Therefore, one cannot apply a rigid filter and evaluate all companies with the same metric.
How do you adapt?
To create a questionnaire for an emerging country, one can use the classic questions that you would ask any company in a developed economy. But certain differences have to be anticipated. For example, in my opinion, we have to admit that a Chinese company can hardly have an answer on freedom of association or unionisation. On the question of the use of resources, packaging and so on, a single positive answer is sufficient in a country with a very low standard of living. It shows a real willingness, even if it cannot be exercised on all fronts. For example, we know of an Indian construction company that, aware of safety issues, distributed a complete set of equipment to its employees, including reinforced shoes. But since these people are used to living barefoot, the employees cut the soles out so that if the shoes are clearly visible, they are completely useless.
We therefore use a method that allows for a heterogeneous set of responses.
Why is ESG important to you?
I find - as do many people - that our world has really hardened. That people are worried, often discouraged or anxious. We are fortunate that there is no correct prediction in this regard. For example, I have believed for a very long time that a technological breakthrough in the field of energy would solve most of our serious environmental problems like global warming, access to water and almost all the others. You only have to look at Jean-Marc Jancovici's presentations to see that.
History is made of considerable and above all unexpected changes (combustion engine, railway, internet, etc.).
Let us keep in mind that we cannot predict everything, but we can act. Acting is a necessary condition! And it may also prove to be sufficient.