Is Asia joining the sustainable investment revolution? - BNP Paribas CIB
 
Friday 08 March 2019

While investing sustainably has generated tremendous interest, ESG in Asia Pacific has lagged behind other regions. Is this about to change?


Broader adoption of environmental, social and governance (ESG) investing is now accelerating in Asia. In particular, we're seeing a greater push by leading institutions or governments in embracing ESG.

After Japan's Government Pension Investment Fund (GPIF) signed the UN-backed Principles for Responsible Investment (PRI) in 2015, sustainable assets grew rapidly to $474 billion in 2016 – up 6,670% from $7 billion in 2014. [1] Over the last year, we have seen sustainable investment move to the forefront in Asia, with an ever-increasing number of events, conferences, media articles and conversations with our clients focusing on ESG.

In China, the government has been promoting environmental investments by, for example, driving forward issuance of green bonds – a market in which China has now become the second largest issuer in the world, with $31.29 billion issuance and representing 18.7% of the global issuance in 2018. [2] In Hong Kong, there are now 25 signatories to the PRI, 11 of which joined since 2017. In Malaysia, KWAP, the country's largest public services pension fund, signed the PRI in February 2018, confirming its increasing focus on promoting better ESG practices.

But there's still much work to be done. Although interest in investing sustainably has been growing rapidly in the region, ESG in Asia compared to other regions is still in its infancy. According to the Global Sustainable Investment Review (GSIR) 2016, while worldwide sustainable assets stood at $23 trillion, in Asia ex-Japan, the total figure was only $52 billion, a tiny fraction of the global total. Of Asia's total professionally-managed funds, less than 1% are sustainable assets.

Investing responsibly for future generations

The global economic crisis of 2008 has led to a radical rethink of the role finance plays in our society. It has underlined the necessity for financial industry stakeholders to align themselves with the long-term interests of our economy.

Climate change, ageing populations and social inequalities pose new risks that are complex to grasp, and which could destroy value for investors both in the medium- and long-term. It is our duty to take into account these risks: for our clients, of course, but also for our staff, our shareholders, our suppliers and our partners – as well as for society as a whole and for future generations.
"After Japan's GPIF signed the UN-backed Principles for Responsible Investment in 2015, sustainable assets reached $474 billion in 2016 – up 6,670% since 2014"

At BNP Paribas, we believe in a world with a low-carbon, more sustainable and more inclusive economic growth model. We are taking steps to direct our clients' investments towards sustainable solutions, and at the same time using our influence to support those companies in which we invest in their transition to more responsible business practices.
 
It is also our role to share our expertise and skills with our peers and with those institutional investors around the world that are committed to focusing public policy on the creation of a global economy that is more respectful of the environment.

Lastly, like every company, we seek performance and growth. But there is increasing recognition of the need to nurture broader-based growth with wider benefits to society at large.

Our vision is clear: to contribute to a better future through our responsible investment policy.


[1] 2016 Global Sustainable Investment Review
[2] Climate Bonds Initiative



Opinions expressed herein reflect the judgment of BNP Paribas as of the date of this article and may be subject to change. This article is not intended to be a solicitation or recommendation for a purchase, sale or any other transaction in respect of securities, foreign exchange or other financial instrument. The article has been prepared for information purposes only to serve as a reference for your investment decisions. You must use your own judgment to make any final decision on investment.
 

 
 
Ligia Torres
CEO Asia Pacific at BNP Paribas Asset Management
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