Consideration of environmental, social and governance-related factors is on the rise amongst end-investors in Asia Pacific, according to a KPMG report, although there is a sizeable gap compared to regions elsewhere.
More end-investors in APAC are taking ESG considerations into account when selecting asset managers, according to a report by KPMG and Quinlan & Associates, including pension funds, sovereign wealth funds and high net worth individuals (HNWI).
25 percent of Hong Kong HNWIs, for example, said that sustainability was core in their investment focus for 2022 – up three-fold from just 8 percent in 2020.
On the institutional side, Japan’s government pension fund grew its ESG allocation by 9 times from 2017 to 2022 while Singapore’s sovereign wealth fund established a dedicated ESG function.
ESG Opportunity
Although Asia lags behind its other peers in ESG integration – assets under management from sustainable funds in Europe are 19 times greater than APAC – continued progress spells a majority opportunity ahead.
According to KPMG, ESG-friendly asset managers in APAC face a $1.82 billion revenue opportunity by 2025, up from around $869 million by the end of 2022.
«APAC asset managers need to carefully evaluate a holistic range of strategic and operational considerations when embarking on their ESG transformation journey if they are to truly capitalize on the ESG opportunity in the region beyond regulatory 'box ticking’,» the report added.
