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August 18, 2012

Emerging Markets ESG Updates Database of Contacts
    by Robert Kropp

SocialFunds.com talks with Geoffrey Mazullo, whose twenty years of involvement with environmental, social, and corporate governance issues in emerging markets have provided him with a wealth of data and contacts compiled in a unique resource.

SocialFunds.com -- Last month, Emerging Markets ESG published the most recent update of its Database of Contacts in the Field of Socially Responsible Investment (SRI), an exhaustive compilation of 1,539 organizations, and 807 conferences and events, from 72 countries.

The database is the brainchild of Geoffrey Mazullo, as is Emerging Markets ESG itself.

Following a stint as Senior Analyst with Institutional Shareholder Services (ISS) in the early nineties, Mazullo went on to teach at two universities in Poland, positions that he still holds. More recently, he traveled to Egypt to help that country's banks develop the corporate governance standards required of signatories to the Equator Principles, a global framework for managing environmental and social risk in project finance transactions.

He first compiled the database in 2002, when he was in Budapest as the director of Partners for Financial Stability (PFS), a program administered by the United States Agency for International Development (USAID). In 2009, after the PFS program had ended, Mazullo founded Emerging Markets ESG and continued to maintain the database.

SocialFunds.com spoke with Mazullo this week, about the database and the mission of Emerging Markets ESG. My first question to him addressed the inclusiveness of the database; why, when practically every endeavor in the world having to do with sustainable investment is included, does the mission specifically address environmental, social, and corporate governance (ESG) conditions in emerging markets?

"This isn't only about what's happening in the emerging markets themselves," Mazullo said. "It's about flows of capital, and knowledge sharing and expertise, in developed markets as they impact emerging markets."

For example, Mazullo continued, "How will ESG process and analysis, management, and disclosure, impact institutional investors—specifically socially responsible or responsible investors—in other parts of the world as they make investment decisions that might include emerging markets?"

The breakup of the Soviet Union paved the way for Mazullo's involvement in ESG issues in the emerging markets of Central and Eastern Europe.

"I went to Russia in 1992 as part of a delegation to help the Russian Ministry of Privatization write corporate governance regulations," Mazullo said. "Then, in 2000, I went to Budapest," where, as director of PFS, he first developed the database.

"The program was developed by USAID in part as a response to the Asian and Russian crises," he said. "Not much was happening in Central and Eastern Europe at that time, because there wasn't full-scale privatization of state pension schemes, so major domestic institutional investors were not taking the issue of responsible investment on board."

"The guiding principles were identification of best practice, and adoption and implementation of international standards," he continued. "As part of that mandate I added an additional layer of looking at extra-financial reporting as well."

He added, "I was teaching corporate governance at the universities in Poland as well, and graduates of the program could apply to become interns to work on the database."

When the program ended, "I knew that I had access to lots of data that was in the public domain, and I also knew that I had developed a huge network of contacts that I wanted to continue working with." In part to maintain that network of contacts, Mazullo then founded Emerging Markets ESG, and began offering the database as a free resource on the website.

"We update it on a six-month basis with information from the public domain," he said. "Quite frankly, I don't know why some of the multi-lateral institutions and international organizations don't have something like this. But they don't, which is another reason to keep doing it."

When someone has been as involved in ESG issues in emerging markets for as long as Mazullo has, it is inevitable that he will be asked to provide his view on the progress made in the space over the years. Mazullo pointed to a service on the website called Five Questions about SRI, an interview series that features the insights of practitioners on the practice of sustainable investment in emerging markets.

A perusal of the interviews demonstrates that the issues confronting emerging markets and their adoption of ESG strategies are diverse, a perspective with which Mazullo concurred. For instance, he pointed out, supply chain issues are most often paramount in China; on the other hand, the most critical ESG issues in Poland are often informed by citizens' access to international media outlets.

Mazullo noted that the concept of Fair Trade was little understood by his students in Poland ten years ago. Now, he pointed out, every student knows about it.

Referring to improved understanding of supply chain management issues, Mazullo said, "When I read an article in the mainstream media drawing references from conditions at Foxconn to executive compensation at Apple, I realize that gains have been made."

"Gains have been made across the board," he continued, "And I think they've been made because of standard-setting organizations and all the constituencies; not only institutional investors, but local constituencies as well." Those local constituencies--including nongovernmental organizations, public-private partnerships, and even listed companies themselves--can all be accessed in the latest update of the database.

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