Growing interest in ESG investing has prompted DBS to embed the MSCI’s ESG Ratings in its suite of wealth products, advisory and discretionary portfolios services.
Though relatively nascent in Asia, ESG investing is a growing trend that cannot be ignored, the Singapore bank said.
MSCI ESG Ratings score companies on their environmental, social and governance risk exposure and risk management abilities relative to industry peers.
Apart from identifying ESG risks and opportunities within investment portfolios, the ratings also serve as an additional tool for investment analysis – allowing investors to go beyond conventional financial analyses when assessing how their investments measure up to others, and therefore make more informed investment decisions.
Wealth transfer
According to the CFA Institute, ESG assets under management in Asia have been the fastest-growing since 2014.
And this momentum is set to continue, driven in part by the impending intergenerational transfer of wealth to sustainability-conscious millennial investors.
A 2017 FactSet study found that 90% of the high net worth millennials surveyed want to increase their allocations to responsible investments within five years.
Favourable attitudes
Marc Lansonneur, head of managed solutions, balance sheet products and investment governance at DBS Wealth, said: “Clients’ attitudes towards ESG investing are becoming increasingly favourable.
“Encouraged by growing evidence of the correlation between robust ESG practices and strong corporate financial performance, more are expressing interest in incorporating ESG into their decision-making processes.
“However, they are often hampered by the lack of historical ESG data or a recognised sustainability benchmark. By adopting MSCI ESG Ratings and enabling transparent comparability, we hope to address this gap and drive growth in the ESG investing space.”
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