Asian investors fall behind their global counterparts in ESG Investing

Singapore taking strides to encourage investing with social impact

4 June 2018, Singapore – Singapore-based Asian Venture Philanthropy Network (AVPN) kicks off its 4-day annual conference today at Suntec City, bringing together over 1000 delegates from 40 countries to discuss social investment in Asia. Singapore’s Minister for Culture, Community and Youth, Ms Grace Fu to give opening keynote address tomorrow, June 5th. In line with the UN’s World Environment Day tomorrow, sessions such as Sustainable Finance & Impact Investment, Financing Solutions to Climate Change and Social Investment in Forest Ecosystem will highlight opportunities for addressing climate action in the region.

Despite economic prosperity in Asia, significant social and environmental issues plague the region, ranging from ageing, declining workforce, labour productivity and gender equality in developed economies like Singapore to more basic needs such as access to healthcare, sanitation, education and water in emerging markets. The conference actively seeks solutions to these issues through sessions like Women’s Empowerment, Building the Education Ecosystem, Purpose-Driven Business Impact and Strategic Philanthropy.

AVPN launches today three reports highlighting industry trends in Asia from Environmental, Social and Governance (ESG) investment to philanthropic foundations shifting into impact investment, and Asian governments employing new Pay-for-Success models such as Social Impact Bonds to combine public and private capital towards social impact.

With only 1% of funds leveraging ESG practices, Asia lags global markets
ESG Investing practices are on the rise by family offices, wealth management teams, and Private Equity/Venture Capital funds in Asia however this trend is significantly lagging behind global markets with only 1% of funds leveraging ESG practices in Asia versus 50% in Australia, New Zealand and Europe, according to the report Driving ESG Investing in Asia. This report is a collaboration between AVPN and Oliver Wyman, a global leader in management consulting, with the support of Marsh & McLennan Companies’ Asia Pacific Risk Center. “The goal of the study” says Kevin Teo, Managing Director of AVPN, “is to inform investors in Asia about their role in channeling capital to improve social and environmental wellbeing along with achieving desired financial performance”.  The report discusses growing evidence that ESG-aligned funds perform at par with traditional investments and in fact come with other benefits like enhanced risk management and long-term value creation.

Singapore Taking Strides to Accelerate ESG Offerings
Regulators and institutional investors are increasingly committing to internationally-recognized principles for ESG Investing and national stewardship codes. For example. Singapore joined the UN Sustainable Stock Exchanges as a partner exchange, and launched a Green Bond Grant Scheme just last year to encourage the development of the green bond market in Singapore.

“Integrating ESG into investment decisions drive long-term value creation and encourage sustainable business practices across Asia,” shared Wolfram Hedrich, Partner at Oliver Wyman. “Furthermore, modern consumers, especially millennials, demand accountability and responsibility from the corporations that serve and employ them and, increasingly, that they invest in. While the trend has had slow uptake in Asia, this is expected to shift as the region sees around 35% of its wealth change hands to the younger generations in the next five to seven years”.