BANDUNG, unpas.ac.id – Currently, investors are getting more careful on choosing the investment instrument at the capital market. They take more concerns on the emitten that prioritizes the sustainability concept (green concept) in order to contribute to environmental preservation in the future.
Indonesia Stock Exchange (Bursa Efek Indonesia, BEI) listed that environment-based investment has been increasing exponentially for the last six years. Investment on emitten whose profiles are closely related to environment, social and governance (ESG) also becomes the main focus for millennial investors.
Today, the growth of young/millennial investors are really significant. Up until June 2021, they are listed as much as 9,33 million at the Indonesian capital market. These numbers have been highly increasing compared to the end of 2020, for as much as 3,87 million investors – or 56%, at the end of 2019. Investors’ stock rose to 2,4 million whose majority or 70% of them are millennials.
Stock investment are now getting more interests by young generation, both millennials and Generation Z (Gen Z). The increase is also getting higher during Covid-19 pandemic since the beginning of 2020.
Millennials started to realize and be aware on the importance of stock investment since the early stage. Other that in the campus, there are also investors starting to invest on stock since they were graduated from high school.
These principles are certainly good, because basically stock investment should be done as early as possible, with the accompaniment in financial literacy improvement.
“Public’s interest on investment, especially for young generation, is now getting higher, so it needs a precise decision to choose types of stocks which are suitable, safe, and prospective,” said the teacher of Business Management, Faculty of Economics and Business (FEB), Ardi Gunardi, SE., M.Si., on Wednesday, July 14th, 2021.
Young generation can be the factors which encourage wider implementation of sustainability concept. The way is by doing investment on the company or project which is eco-friendly based.
“Various research results suggested this kind of investment because it financially gives long-term benefits. Emitten who is carrying out the ESG basic principles is able to do better financial performance compared to emittens who do not do that,” he continued.
It is now much easier for young investors to choose the investment instrument with the sustainability concept since there are various options at the capital market.
The increase of awareness and knowledge of ESG at the level of emitten and capital market investors led BEI to release a new index: IDX ESG Leaders, in last mid-December.
IDX ESG Leaders is an index measuring the performance of stock price by using proper ESG assessment, not controversially significant, as well as having good transaction liquidity and financial performance. IDX ESG Leaders t is also not the only ESG-based stock index.
There is also the SRI-KEHATI (Sustainable and Responsible Investment – Keanekaragaman Hayati, Biodiversity) index, which was launched in June 2009 in collaboration with the IDX and the Biodiversity Foundation (Keanekaragaman Hayati, Kehati). IDX ESG Leaders contains 30 shares, while SRI-Kehati consists of 25 shares.
These two stock indexes consist of excellent emitten, consisting of company stocks which is committed highly to implement practices related to environment, social and governance of emitten in doing the sustainable investment in Indonesia.
“If we assume that successful business is related to the nature preservation and social responsibility of a company, the stocks listed both in IDX ESG Leaders and SRI-KEHATI have long-term prospects which is far more outstanding and brilliant,” he added.
Research result done in 2014 showed that about 88 percent of businessmen who underwent proper ESG practice also had good operational and financial performance. Other than that, companies whose stocks are listed in an exchange or emitten – 80% of them in particular, had their stock price increased, because the commitment had also set a good and proper ESG concept.
SRI-KEHATI index had obtain as much as 173,66 percent return, higher than IHSG and LQ45 index which yielded returns of 148.57 percent and 103.59 percent, respectively, for the period from December 30, 2009 to December 30, 2019.
“For example, for college student – let us say, if health and well-being are the main concern, one possible strategy is to avoid investing in companies that produce alcoholic beverages, tobacco products, or those which harm the nature and environment. In the other words, they better spend their money for company that is trying to make the world a better place to live,” said Ardi, who are also a teacher of Management of Investment and Portfolio.
In addition, investing in stocks is currently not only for profit at all. By combining options for the IDX ESG Leaders and SRI-KEHATI with Value Investing, investors will get a good fundamental issuer at undervalued price, as well as issuers who are aware on environment, care about social, and have good corporate governance (GCG)
“The thing is, ESG investment is about giving the influence on positive change in the public by being better investor,” Ardi, who are Editor-in-Chief of Unpas Indonesian Journal of Sustainability Accounting and Management (IJSAM), concluded.