Aussie ESG uptake growing at ‘rapid pace’
Adoption of environmental, social and governance (ESG) investing in Australia and New Zealand is growing at a “rapid pace”, according to J.P. Morgan Asset Management.
The asset manager said ESG investing was highest in Europe with an 8% compound annual growth rate but that Australia and New Zealand and Japan were catching up. Net inflows into sustainable funds in Asia was close to $8 billion in 2020, 10x that of the previous year’s inflows.
Tai Hui, chief Asia market strategist, said: “Signs indicate that Asia is catching up with growth in Japan overwhelmingly driven by institutional investors and the Bank of Japan with already strong ESG investing adoption in Australia and New Zealand continuing at a rapid pace”.
A key driver for ESG uptake in Asia was the number of ESG investment regulations in areas such as net zero emissions and carbon neutrality that were being adopted which would help create a sound infrastructure for sustainable investment.
The global energy mix would also need to become more diversified with increasing demands for environmentally-friendly fuels and energy combined with lower usage of coal and fossil fuels.
“ESG investing across Asia will become an even more prominent driver in the coming years as the value of assets under management increases. We expect ESG metrics will be increasingly integrated in asset managers’ investment processes, not only as a risk measure but also when considering the return metrics across investments.
“We believe there is still some mispricing in capital markets, and hence room for alpha remains for long-term investors,” added Hui.
AUTHOR
Laura Dew
Recommended for you
Some 42 per cent of CEOs say they are actively reinventing their business to stay relevant in the next decade, with consumer services the most common choice for asset and wealth managers.
Former Ophir Asset Management chief executive, George Chirakis, has joined private equity manager Scarcity Partners, while the asset manager has appointed a replacement from Macquarie.
Australian Unity has appointed a fund manager for its Healthcare Property Trust, joining from Centuria Healthcare, as it restructures the product with a series of senior appointments.
Financial advisers nervous about the liquidity of private markets funds for their retail clients are the target of fund managers launching semi-liquid products which offer greater flexibility and redemptions.
