Asian investors more optimistic on ESG than global counterparts

Asian-investors/ESG/united-nations-sustainable-development-goals/bnp-paribas/esg-disclosure/

10 April 2019
| By Hannah Wootton |
image
image
expand image

While the majority of Asian investors increasing their ethical investments in line with the United Nations Sustainable Development Goals, data and technology are proving barriers to environmental, social and governance (ESG) investing integration.

Asia Pacific respondents to BNP Paribas’ ESG Global Survey 2019 said that data was the biggest issue, ranking it ahead of costs, a lack of advanced analytical skills, and greenwashing risks. A further quarter pointed to technology costs as a barrier, up from 16 per cent in 2017.

Despite still lagging behind their global counterparts for ESG asset allocation however, at 15 versus 18 per cent globally, Asia Pacific respondents were more optimistic about allocating funds to ESG in the future. Fifty-five per cent expected to incorporate 50 – 75 per cent ESG funds in two years’ time, compared to 49 per cent globally.

This could partially be due to them expecting a crackdown on ESG disclosure, with 62 per cent of Asia Pacific investors expecting an increase in ESG disclosure requirements over the next year, while only 59 per cent did globally.

The main incentive behind ESG investing however, was their financial impact. Almost two thirds of Asia Pacific respondents ranked “improved long-term returns” as their top reason for ESG investment, with 70 per cent expecting their ESG portfolios to outperform over the next five years.

A key difference between Asia Pacific ESG investors and global ones was where they sourced their ESG information. In the Asia Pacific, respondents leaned toward benchmarks, with 42 per cent saying that putting funds against an ESG benchmark would have the greatest impact. Globally, investors were more likely to rely on ESG profiles. More Asia Pacific respondents aligned investment frameworks mainly by setting Sustainable Development Goals-related revenue targets for investee companies than they did globally, at 76 versus 65 per cent.

The expected growth in ESG investing in the area had also led to the creation of new jobs in the region.

Asia Pacific investors were more likely to hire ESG talent from non-traditional backgrounds, train incumbent teams in ESG principles and best practice, and hire or increase numbers of external ESG consultants and specialists than their global counterparts.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

2 months 2 weeks ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months 3 weeks ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

4 months 3 weeks ago

ASIC has suspended the Australian Financial Services Licence of a Melbourne-based financial advice firm....

1 week ago

The corporate regulator has issued infringement notices to three AFSLs whose financial advisers provided personal advice to a retail client while unregistered....

1 week 6 days ago

ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test....

2 weeks 4 days ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND