GLOBAL - Investors are significantly underestimating the potential gains to be had from Asian sustainability, according to a study by Swiss international bank Vontobel.
The white paper called Sustainable Investing in Asia - Uncovering Opportunities and Risks claimed the Asian region, excluding Japan, offers a very high yield potential for sustainable investments.
Assets under management could increase from their current level of $20bn (€14.7bn) - or 0.4% of global sustainable assets under management - to as much as $4trn, according to Vontobel. This is said to be possible through changing social, environmental and corporate governance (ESG) standards within the region, such as environmental regulations or initiatives by various Asian stock exchanges to improve listed firms' ESG reporting and performance.
It said while investors are familiar with the risks of investing in the region, they underestimate its potential. The study reported that major progress achieved in data availability accordingly make it possible to identify Asian companies with high standards of sustainability and optimise investments.
"Key success factors for investors to look for include a clearly defined approach to separate sustainability leaders from laggards, as well as clearly committed and locally-experienced sustainability experts and portfolio management resources," said Vontobel.
Elsewhere, Adelphi Consult together with Swiss sustainability rating agency INrate, on behalf of the German Ministry for the Environment, has found equity investors can reduce their carbon intensity by more than a third if they rebalance their portfolios.
In the interim report, climate and environmental technology funds showed a greenhouse gas reduction potential of 35% compared to conventional equity funds. Comparing conventional and climate-friendly savings products, the result was even more obvious as, on average, the investor was responsible for 68% fewer greenhouse gas emissions than when investing in conventional saving products.
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