Wealthy Asians eager to join sustainable investing bandwagon after Covid-19, but express concerns over returns

05-Dec-2020 Intellasia | JapanTimes | 6:02 AM Print This Post

Asia’s richest expect sustainable investing to accelerate after the Covid-19 pandemic, even if questions remain whether these will generate higher returns than putting money elsewhere, according to a study by Lombard Odier, one of Switzerland’s oldest private banks.

Ultra high net worth individuals (UHNWI) in Asia, those with a net worth of at least $30 million, showed strong interest in sustainability as an investment consideration going forward, a trend which has been accelerated by the Covid-19 situation, said Vincent Magnenat, chief executive for Asia at Lombard Odier, in an interview.

“Sustainability has been accelerated by the Covid situation, by what we are going through,” said Magnenat. “At the same time, investing in companies with an emphasis on sustainability will be a factor of higher return in the coming years.”

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Lombard Odier’s report focused on four areas technology, investment, sustainability and family services and surveyed more than 150 UHNWIs in Hong Kong, Indonesia, Japan, Singapore, the Philippines, Taiwan and Thailand.

Some 89 per cent of the respondents expected the trend in investment decisions linked to sustainability to stay, conveying their desire to better understand the options available to them when it came to sustainable investing.

Around 61 per cent of participants took environmental, social and governance (ESG) into account when making investment decisions.

However, 46 per cent of respondents expressed concern that choosing sustainability-related investments would not generate superior returns.

UHNWIs in Asia “are not yet convinced that it will bring higher rates of return, but they are ready to take [sustainability] into consideration in their investments,” said Magnenat. “It is the role of the asset managers today to demonstrate that taking [sustainability] into consideration will deliver better returns in the coming years.”

Sustainable investing, measured by ESG factors, has resonated with more fund managers as society demands a wider application of ethics in investing, while regulators across the world impose disclosure requirements.

BlackRock, the world’s biggest asset manager with $7.8 trillion in assets under management, expects a growing shift towards sustainable investing in Asia. Investors should be able to find opportunities for ESG-related investment growth in the more than $2.5 trillion actively managed equity funds in the Asia-Pacific, given an increased focus on sustainability in the region, the asset manager said in its 2021 Asia investment outlook report.

The rapid growth in assets under management adhering to ESG standards continues to grow rapidly, and this would put greater pressure on listed companies to align business models and practices with ESG standards, Credit Suisse said in their 2021 investment outlook report for the Asia-Pacific region.

Separately, the results of the HSBC Navigator survey released earlier this week showed that up to 96 per cent of the 351 Hong Kong businesses surveyed saw opportunities from improving environmental and ethical sustainability, which they say will increase customer demand, attract investment and enhance their reputation.

Most of the companies believed a greater focus on ESG would deliver growth, with nearly half of those surveyed expecting growth of as much as 5 per cent.



Category: Regional

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