Asia’s uber-wealthy are fuelling growth in impact investing

The wealthy are looking both to drive change in society and earn returns, which means more family offices are actively looking to incorporate ESG in their portfolios

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These days, Asia’s wealthy are requiring more from their investments. They want to drive positive change in society in additional to earning financial returns.

Fortunately, the options for the rich to make meaningful investments and make money are expanding with the introduction of financial solutions and products relating to investments that target sustainable societal outcomes and meet environmental, social and governance (ESG) considerations.

Family offices in Asia are now starting to embrace ESG, according to managers and ESG experts at an Impact Investing Roundtable exclusively sponsored by BNP Paribas Wealth Management and moderated by The Asset executive editor Bayani Cruz.

The panel of speakers, that included Alliance Bernstein portfolio manager David Wong, Social Ventures Hong Kong CEO Francis Ngai, WWF-Hong Kong’s research analyst Sam Hilton, and Swire Group’s sustainable development head Mark Watson, agree that ideas such as ESG and financial technology are now firmly entrenched in the minds of the wealthy.

Family offices catering to the wealthy families that own many of the large private businesses in Asia are actively exploring ways to incorporate ESG factors in their portfolios, they note.

From both external and internal angles, family offices are now spoiled for choice with investment vehicles that include impact and sustainable investing. Asset managers can now undertake impact investment for many asset owners.

But the panel of experts say that asset owners should ensure that their strategies are well defined and can be measured. They also say the amount of stewardship engagement involved in undertaking impact investing for the rich is as crucial as the fund’s financial performance.

Internally, incorporating ESG and utilizing new technology can de-risk some of the bigger businesses, panellists add. Adopting ESG may not generate immediate returns, but could lead to a stronger performance in the long run.

ESG experts at the panel observe the tendency of mainstream investors to focus on short-term goals, with many looking for returns based on three-month cycles. Keeping a short-term view doesn’t usually help with social outcomes and could raise financial risks, panellists note. With ESG integration and responsible strategies, portfolios can beat traditional benchmarks in terms of performance under proper management.

Integrating ESG factors is an improved version of due diligence and over the long term offers both positive societal outcomes and performance, the experts note. 

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Date

9 May 2019

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