A new white paper has highlighted the progress of ESG-focused investing in Asia, with Japan continuing to be the leading market in the region.
The paper was jointly published by KPMG, ESCAP Sustainable Business Network (ESBN) and Pacific Basin Economic Council (PBEC). The paper coincides with the the Financial Times also reporting this week on the increased focus on ESG issues in AGMs in Japan.
Regulators, sovereign wealth funds and pensions funds in Asia can continue to learn from the experiences of their European counterparts in promoting a focus on ESG issues in their portfolios. European - particularly Scandinavian - institutional investors shifted the focus of European sponsors by requiring enhanced disclosures. Asian institutions look set to be able to cause a similar shift in local markets in the coming years.
This trend also represents an opportunity for those private equity funds who already have strong ESG protocols. They may find themselves best placed to raise commitments from institutional Asian investors looking for investments with clear ESG reporting.
While corporate sentiment in Asia Pacific in favour of sustainable investment has clearly risen in the last few years, greater commitment is required, the paper finds. Currently over four-fifths of the total global sustainable investing assets are still concentrated in Europe and North America, according to the Global Sustainable Investment Alliance. Asia, especially outside of Japan, is behind, but with a growing realisation of the importance of sustainable investments.