Updated: Apr 13, 2020
Demand for sustainable investing in Asia grows amid virus outbreak
There is increasing demand for sustainable investments among Asia’s wealthy clients as the global coronavirus outbreak boosts awareness of environmental and health issues, Bloomberg reports.
UBS, the world’s largest wealth manager, says assets managed by the wholly sustainable portfolios of its private banking arm in Asia have more than doubled to US$1 billion since the beginning of last year. Investors from Greater China accounted for around 60% of these investments.
Mario Knoepfel, head of sustainable and impact investing advisory for Asia Pacific at the firm’s wealth management unit, tells Bloomberg that the attitude of wealthy Asian investors has moved beyond one characterised by scepticism.
The attitude has now moved to “I’ve heard about it, I want to know, I want to learn”, says Knoepfel.
More than 100 firms set to enter China's burgeoning ESG arena
Sustainable investing in China is likely to take a significant step into the mainstream over the next few years as more than 100 financial firms are planning to introduce environmental, social and governance strategies into their investments.
A total of 129 firms out of 324 mutual fund managers, private fund managers and securities brokerages that were interviewed said they would implement relevant environmental, social and governance strategies in the next one to two years, according to a survey released by the Asset Management Association of China at the end of March.
ESG and alpha: ESG integration in China
China is a world-leading green bond issuer, with $31.2 billion green bond issuance in 2018. The central bank added green credit into the macro-prudence assessment framework in 2017. The National Development and Reform Commission updated the national industrial catalogue to clarify standards for green industry and green projects. In 2020, securities regulators and stock exchanges are expected to establish a mandatory ESG disclosure framework for listed companies.
Commentary: How China could become a sustainable investing leader
Finding ESG standouts in China is no easy task because the country's corporate governance approach is haphazard, notable for relatively weaker accounting standards that make corporate disclosures unreliable. According to a CFA Institute report, a lack of historical data, company culture and a limited understanding of the role of sustainability are by far the largest obstacles to greater integration of ESG standards. About one-third of Chinese companies issue corporate social responsibility reports, but without set standards most reports contain a significant amount of non-material information. (The Chinese Securities Regulatory Commission is expected to unveil a formal plan this year, requiring greater ESG disclosures from A-share companies.)