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Promising Sustainable Investment in Asia
By admin January 26, 2017

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Sustainable investment is an investment approach that considers environmental, social and governance (ESG) factors in portfolio selection and management. Today many companies are expected to manage diverse social and environmental challenges such as climate change, human rights and education through their investments.

Sustainable investment is a sector that has witnessed rapid growth in recent years. Globally, the sustainable investment market stood at $21.4 trillion at the start of 2014, up nearly 61 percent from $13.3 trillion in 2012. Although the United States, Canada, and Europe together account for 99 percent of global sustainable assets, the market in Asia is growing. According to the Global Sustainable Investment Review 2014, market capitalization increased to $53 billion in 2014 from $40 billion in 2012, across 13 Asian markets, including Bangladesh, China, Hong Kong, India, Indonesia, Japan, South Korea, Malaysia, Pakistan, Singapore, Taiwan, Thailand, and Vietnam.

Last year, the London Stock Exchange (LSE) welcomed the listing of the first ever Chinese Green Covered Bond from the Bank of China. “This listing demonstrates that Chinese issuers can bring innovation to bear in exciting new areas such as green finance,” said Xavier Rolet, Chief Executive of London Stock Exchange Group (LSEG). Rapid growth is also taking place in Singapore and Indonesia due to strong support from government policies. World Bank’s 2017 Global Economic Prospects report estimated that sizable investment gaps remain in energy, human resources, and especially in health and education across Asia.

Governments throughout Asia are developing national policies and launching guidelines and regulations to increase ESG disclosure. In the meantime, many countries are also exploring policy incentives for private sector participation. For example, to address the growing energy needs and adapting to climate change, the government of Vietnam has developed an investment plan in coordination with multinational organizations and key Vietnamese stakeholders to tap $250 million from the Clean Technology Fund (CTF) for targeted low-carbon investments in power, transport, and industrial sectors. Indeed, private sector plays a key role in financing for sustainable growth. The private sector, by virtue of its contribution to growth, employment, and innovation, has both the acumen and potential to respond to the challenges of sustainable development.

While looking for investment opportunities, investors should keep in mind that Asia is a region with great diversity. As suggested by Jessica Robinson, CEO of the Association for Sustainable & Responsible Investment in Asia (ASrIA), it is important for investors based outside of the region to understand and appreciate ESG risks and opportunities at the country level, and stay informed on critical changes to the policy, regulatory, and financial environment.

 

Read more:

The State of Sustainable and Responsible Investment in Asia

Decoding the Elements of Sustainable Investing

WWF: Sustainable finance in Singapore, Malaysia and Indonesia: A review of financiers’ ESG practices, disclosure standards and regulations

‘Sustainable Investing’ Goes Mainstream


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