Interest in sustainable investing in Asia is high but adoption continues to lag, according to a recent Lombard Odier survey, with more work needed to convert enthusiasm into action.

78 percent of high net worth individuals (HNWI) in Asia Pacific expressed interest in sustainable investments, according to Lombard Odier’s 2022 APAC HNWI Study. Notable market leaders in the region include Taiwan (88 percent) and Thailand (93 percent). 

Nevertheless, action has not proportionally reflected this with 45 percent of HNWIs in the region holding less than 20 percent of sustainable investments in their portfolios. 12 percent are unsure about even the level of sustainable investments they currently hold while 17 percent do not hold any at all.

«Despite the high interest generally, there is work to be done to capture this enthusiasm and translate it into concrete action,» Lombard Odier’s report said. «In fact, our study findings show that there is a direct correlation between the level of help given by banks to the weight of sustainable investments in a HNWIs' portfolio.»

Barriers of Entry

Of the HNWIs in APAC that said they were not interested in sustainable investments, family interests were a major factor with many members not convinced about the benefits. 41 percent and 36 percent of respondents cited relative underperformance of financial returns and lack of proven track records, respectively, as barriers to entry. One-third are still not sure about what sustainability is. 

«The important message from this is that sustainability is being taken seriously as an investment opportunity. However, the opportunity will only be realized if banks proactively reach, engage, educate and clarify,» the report said.

Generational Differences 

Unsurprisingly, younger investors tend to be more convinced about sustainable investing with over 80 percent of APAC HNWIs aged 18 to 34 years expressing interest. In contrast, just 60 percent of those that are 70 years old or above said they were interested.

The motivation for sustainable investing also differs with more than 40 percent in the former group investing in a specific, passionate cause compared to less than 20 percent in the latter group. 

Economy, Investments, Digital

Lombard Odier’s study also covered economic concerns, investment behavior and digital trends. 

On the economy, APAC HNWIs named rising inflation as the biggest risk (77 percent). Within their investments, market volatility is the top worry (50 percent) with 44 percent diverting away from traditional asset classes such as stocks and bonds to other areas like private assets.

On digital investments, 83 percent of APAC HNWIs’ portfolios have invested 5 percent or less in cryptocurrencies with just 20 percent seeking to increase weightings.