Greater global standardisation, more regulatory support and enhanced understanding are vital if wealthy Asian investors are to realise the full potential of ESG-driven investing, according to a new report published by Hubbis and supported by Jersey Finance.
The report, Asia’s HNW and UHNW Investors: the Growing Importance of ESG, Impact and Sustainability, explores attitudes and approaches towards ESG and sustainability among the Asian wealth market.
Based on a survey of 112 wealth management leaders and decision-makers in Asia, it found that there is undoubtedly a rising tide of interest in ESG investing among Asia’s wealthy individuals and families.
However, the sector is still in its infancy, with regulation, education and infrastructure all presenting obstacles for investors.
Key findings
• 80% of respondents said ESG-driven investing is taking off, with 14% saying it is already a source of significant activity. But 20% said it is tough to gain traction with wealthy private clients.
• Respondents suggested that within a decade, 85% of equity allocations of HNW/UHNW Asian investors will be driven by ESG considerations for 25% or more of all portfolios.
• 76% said Millennials and GenZ are most engaged in ESG investing, or will be when they control more of the wealth.
• 81% of Asian single family offices are either receptive to the concept of ESG investing but want to learn more or are awaiting evidence that such investment produces better results. However, only 12% of SFOs are thus far driving through with such investment decisions.
• 23% of respondents said the lack of a clear regulatory guidance was holding them back, while 21% said too many bodies providing different standards was a problem.
• 51% said global private banks are leading the way in terms of communicating and promoting ESG-driven investing in the Asian market, with 29% saying that boutique international private banks were in a good position too.
Joe Moynihan (pictured), Chief Executive Officer of Jersey Finance said: “There is no doubt that private investors across the globe are paying increasing attention to ESG criteria, and we’re seeing that clearly being played out among the wealthiest investors in the Asian market.
“However, although there is an appetite to understand more about ESG investing and to allocate more to such investments over the coming decade with the growing input of the next generation, this is a long-term journey for the market.
"It is a sector that is still in its infancy in Asia. For private client investors to take the next step, there must be greater global standardisation, regulatory support, understanding among those private investors, and evidence that this will genuinely help their portfolios outperform as well as mitigate risks.
“Jersey has a clear vision of being recognised as the leading partner jurisdiction for sustainable finance in the Asian market. These insights will help inform our strategy as we continue to work with investors, advisers and key players to help private investors unlock the potential offered by ESG investments.”
• The new research can be downloaded here