International Finance Corp. awarded a grant to develop an index of emerging-market companies based on their environmental, social and corporate-governance performance.
The index will be created by Standard & Poor's, CRISIL - S&P's majority-owned securities ratings affiliate in India - and KLD Research & Analytics, a social and environmental investment research company. The group plans to create a pilot index for India, comprising major Indian companies that meet certain ESG criteria, and market it to local and international investors, Noel Friedman, KLD managing director of research products, and Martin Winn, S&P vice president-communications, said in separate interviews. If the group can develop the new index into a viable product, it plans to expand its work to develop such ESG indexes in other emerging markets, they said.
"We haven't set any asset goals and we haven't determined specific measures of success," Mr. Friedman said. But viability would include getting the index licensed for investment and benchmarking products and selling research, he added.
IFC, an investment unit of the World Bank, is providing $250,000 for the project, which Mr. Friedman estimates will be about half the amount needed. The group has agreed to commit additional resources.
Mr. Friedman said the group expects the project to start in early 2007 and finish in 12 to 13 months.