Wealthy Asian investors number one in caring

PUBLISHED : Thursday, 26 July, 2007, 12:00am
UPDATED : Thursday, 26 July, 2007, 12:00am

Aglobal report suggests that wealthy Asian investors are leading the world when it comes to socially responsible investment (SRI).

The World Wealth Report from Merrill Lynch and Capgemini indicates that Asian high-net-worth individuals are allocating 10 to 15 per cent of their portfolios to SRI strategies compared with 6 to 8 per cent in other locations.

Kenneth Y.S. Sit, Bank Sarasin-Rabo (Asia) chief executive, said there was no compromise on return on investment in selecting socially responsible investment strategies.

'Our experience and a lot of academic research show that taking environmental and social criteria into account produces higher returns and less volatility.

'It is a fairy tale that SRI must underperform. SRI is not about tree hugging. The social and environmental analysis is simply a much deeper analysis of companies and their financial success,' Mr Sit said.

Bank Sarasin is widely credited with being the first large financial firm to adopt SRI strategies.

The bank launched the first eco-efficiency fund in the world in 1994 and this concept is now the industry's gold standard. And, in 2000, the bank was one of the first to launch a sustainability theme fund (Sarasin New Energy).

Sustainable development is based on the interplay and constant rebalancing of three dimensions - economy, environment and society.

'All our sustainable investment strategies follow two basic approaches, avoiding risks and seizing opportunities. In our sustainable investment strategy the focus is more on the environmental and social risks, which equal economic risks for companies,' Mr Sit said.

Sustainable thematic investment is concentrated on selected themes that are crucial for a sustainable future with growth prospects such as clean energy, health, water, sustainable consumption and sustainable mobility. Bank Sarasin has developed a valuation concept for sustainable asset management which is compared against the opportunities presented by sustainable growth.

Mr Sit said the risk-reward analysis extended far beyond the purely financial.

Therefore it was important that investments in sustainable companies, contrary to a widely held prejudice, could be more profitable and less risky in the long term than conventional investments.

Mr Sit said interest in SRI initiatives looked set to expand.

'Growing environmental and social awareness is becoming a risk for companies that don't take special care to preserve the environment and maintain consumer confidence.

'Furthermore, companies that have prepared for sustainable growth enjoy competitive advantages,' Mr Sit said.

Often these companies consumed fewer resources providing them with a systemic advantage if there was a resource shortage.