The long road toward ESG integration
By Francis Nikolai Acosta, 6 Jun 18
Integrating ESG in the investment process is easier said than done and will vary from one team to another, according to industry sources.
Conversations typically centre on performance. A number of investment professionals have argued that sustainable investments provide better returns, citing mostly academic findings.
But evidence also shows that there is justified scepticism around claims that sustainable or impact products outperform the broader market. Some have also indicated that these investments are on par with traditional investments.
Additionally, interest in Asia has traditionally been low and the region remains woefully behind in the number of signatories to the UN’s Principles for Responsible Investment.
At the end of 2017, the total number of asset manager signatories globally was 895. In Asia ex-Japan, the number was 22.
Looking at asset owners, 289 are signed up globally and Asia ex-Japan has only two: Korea’s National Pension Service and the Indonesian Biodiversity Foundation.
Conspicuously missing from the list are Temasek and GIC, two Singapore state-owned funds that invest heavily in the region.
Nonetheless, ESG principles seem to have new energy recently. The number of signatories to the UN’s Principles for Responsible Investment continues to increase.
To date, the UNPRI has 2,250 signatories in total compared to 1,800 in 2017, according to data from the UN.