Eye on Asia | Asia trails the developed world in sustainable investment, but now looks poised to close that gap
- Asia has an urgent need for development, but also to do so in a manner that does not further degrade the environment
- Add to that new regulations and more institutional support, and it appears the region will see a sustainable investment boom
Asia looks set to become a hotbed for sustainable investment, driven by structural economic factors, growing institutional allocations and tightening regulations.
Investors in Asia have lagged behind their developed-market peers in terms of integrating environmental, social and governance (ESG) analysis into their decision-making and allocations.
There are already several indicators pointing to a dramatic uptick in sustainable investment in Asia. Assets under the management of Asian signatories to the UN Principles for Responsible Investment have surged 87 per cent in the three years to the end of 2018, according to our own calculations.
Moreover, large asset owners in Asia are allocating increasingly to strategies that take environmental, social and governance issues into account. Multilateral institutions such as the Asian Infrastructure Investment Bank (AIIB) and Asian Development Bank (ADB) have launched ESG and green bond mandates in recent years.
An additional layer of support is coming from government-linked institutions across Asia. Japan, Taiwan, Malaysia and South Korea have, for example, been promoting the adoption of environmental, social and governance analysis and launching ESG investment mandates.
