VZCZCXRO6156
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJA #0994 1620841
ZNR UUUUU ZZH
R 110841Z JUN 09
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 2531
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS COLL
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHKO/AMEMBASSY TOKYO 3056
RUEHBJ/AMEMBASSY BEIJING 5949
RUEHBY/AMEMBASSY CANBERRA 3637
RUEHLO/AMEMBASSY LONDON 0929
RUCNDT/USMISSION USUN NEW YORK 1040
RHEHNSC/NSC WASHDC

UNCLAS JAKARTA 000994 
 
SIPDIS 
 
DEPT FOR OES, EAP 
USTR FOR DBROOKS 
USAID FOR ANE, EGAT 
TREASURY FOR KBERG 
BANGKOK FOR RDM/A 
 
E.O. 12958: N/A 
TAGS: SENV EAGR KGHG ECON PGOV ID
SUBJECT: USG Partner Launches 1st Green Stock Index in SE Asia 
¶1.  On June 8, the Indonesia Stock Exchange and the Indonesian 
Biodiversity Foundation (KEHATI) launched an investment index 
intended to raise awareness of companies' environmental and social 
 
track records.  Named the Sustainable and Responsible Investment 
index (or SRI-KEHATI), it is the second single-nation sustainability 
index in Asia (the first is in Japan) and the first in Southeast 
Asia, according to KEHATI.  The index uses a rating methodology that 
takes into account companies' behavior towards the environment and 
communities as well as good corporate governance. 
¶2.  SRI-KEHATI is comprised of 25 companies in Indonesia judged the 
best of a larger list of nominated companies.  Companies eligible 
for nomination must have a minimum of 1 trillion rupiah 
(approximately $100,000,000) in total assets, a positive 
price-earnings ratio, and at least 10 percent of its shares on a 
free float.  (Note: The latter requirement excludes most if not all 
foreign natural-resource companies, among others, from the index, 
because they tend to be wholly-owned subsidiaries or joint-venture 
partnerships.  End Note.)  SRI-KEHATI then considers six additional 
criteria to select the top 25 nominated companies: environment 
conservation, community development, corporate governance, human 
rights, business behavior and labor practices.  The current 25 
companies include a palm oil firm, three miners and two cement 
companies, as well several banks. 
¶3.  SRI-KEHATI will update its index twice a year, on the first 
stock market day in February and August, taking into account the 
total number of outstanding stocks and any event affecting the 
stocks that comprise this index.  KEHATI used transaction and 
financial data from January 2007 to April 2009, to back-test 
SRI-KEHATI and verify the reliability of its selection criteria. 
The results, claim KEHATI, show that SRI-KEHATI outperformed the 
Indonesia Composite Index (IHSG) over that period. 
 
¶4.  KEHATI is an independent nongovernmental organization whose 
mission is to support and facilitate biodiversity conservation in 
Indonesia through grant-making.  It was established in 1995 with USG 
technical assistance as well as an initial grant of $16.5 million 
for an endowment fund.  From 1996 to 2007, the endowment generated 
more than $17 million in returns, of which over two-thirds have been 
disbursed in pursuit of KEHATI's mission.  KEHATI is also one of two 
NGOs (the other is Conservation International, or CI) participating 
in the Tropical Forest Conservation Act (TFCA) deal that the USG is 
finalizing with the Government of Indonesia.  KEHATI and CI are each 
contributing $1 million towards the deal. 
 
NORTH