Findings show the current state of ESG integration in Australia, China, India, Japan, Singapore and Hong Kong SAR, China.
New research by CFA Institute and the Principles for Responsible Investment (PRI) revealed that limited understanding of ESG integration and issues, lack of comparable and historical data, and cultural issues are the top barriers to ESG integration for equity and fixed income investors in Asia Pacific.
A series of 23 workshops with financial professionals across Asia Pacific conducted by CFA Institute and PRI reveal commonality on practices, barriers, and drivers of ESG integration globally, as well as a number of regional differences.
It is clear that further guidance is needed to overcome these barriers, but this series of reports and case studies can help investors learn about best practices for ESG integration from their local peers across different asset classes.
The findings were published in a report released today titled ESG integration in Asia Pacific: markets, practices, and data, which was the fourth and final in a series on ESG integration by CFA Institute and PRI. The report focuses on ESG integration in Australia, China, Hong Kong SAR, India, Japan, Singapore and Hong Kong SAR, China.
The series of reports reveal that risk management is the number one driver of ESG integration in 14 of the 17 markets surveyed globally. In Asia, there is increasingly more ESG integration, and investors expect ESG issues to more frequently impact prices.
Key findings from the Asia Pacific region
Australia: Risk management and client demand are the main factors driving ESG integration. Fiduciary responsibility is the main factor for fixed income investors.
China: Significant uptake of ESG investing in recent years. Major drivers: ESG integration demand from international investors and regulation.
Hong Kong SAR, China: Demand for ESG likely to continue upward trajectory as institutional and some retail investors want ESG investments.
India: Buy-in for ESG investing slow over the last few years. Most investment managers not seeing demand for ESG products, or asset owners for ESG policies.
Japan: ESG integration is just the beginning, with fiduciary duty a strong driver in equities, and client demand mainly driving adoption in fixed income
Singapore: There is increasingly more ESG integration in Singapore and ESG issues are more frequently impacting prices.
”The Asia Pacific region contains arguably the most diverse markets in the world, each with a unique take on ESG integration,” said Paul Smith, CFA, President and CEO of CFA Institute.
”But the commonality is an uptick in most markets for ESG integration, and we see this trend continuing as investors all over the world seek to better integrate ESG analysis,” Fiona Reynolds, PRI CEO, also commented:
“The PRI is very pleased to continue our partnership with CFA Institute to highlight drivers and barriers to ESG integration around the world. In the latest report, the enthusiasm for ESG integration from Asian investors is extremely encouraging. There is great demand for increased knowledge in ESG, and we expect this trend to be reflected by investors across asset classes in the region ] especially China, Japan and Singapore ] in the coming years.”
The Asia Pacific report follows the publication of the reports, ESG integration in the Americas: markets, practices, and data, ESG integration in Europe, the Middle East, and Africa, and Guidance and case studies for ESG integration: equities and fixed income.
PRI: Duncan Smith firstname.lastname@example.org +44 (0) 203 714 3166
CFA: Antonia Leung Antonia.Leung@cfainstitute.org + 852 3103 9308
Note to editors
The research that went into these reports includes:
surveying 1,100 financial professionals, predominantly CFA charterholders and members, around the world;
running twenty-three workshops in seventeen major markets;
interviewing many practitioners and stakeholders;
publishing 33 case studies written by equity and fixed ]income practitioners;
analysing Bloomberg’s ESG company disclosure scores;
reviewing data from the PRI’s Reporting Framework, the largest global database of information on investors’ ESG practices.