Apac investors catching up in ESG investing

Robeco’s annual climate survey looked at how investors are finding opportunities from climate change

There is continued momentum and commitment among Asia Pacific investors to tackle climate change, according to the Robeco Global Climate Survey 2022.

Indeed, seven out of ten investors say climate change is a significant factor in their investment policy, an increase from 57% in 2021.

Meanwhile, 91% of surveyed European investors, up from 84% in 2021, and 63% of North American investors, down from 74% in 2021, said the same.

“In the long term, climate change continues to be a mega trend. For us, it is no doubt that the future will be low carbon, but it is a question of when and how the transition evolves,” said Lucian Peppelenbos, climate strategist at Robeco, at a media briefing this week.

Robeco’s global climate survey 2022 was conducted in January to cover 300 of the world’s institutional and wholesale investors across Europe, North America and Asia Pacific, representing a total of around $23.7trn in AUM. They include insurance companies, private banks, and family offices with the AUM size of less than $1bn to over $1trn.

Asian investors who responded to the survey are also catching up with European investors in terms of adoption of active ownership within their organisations, with 80% saying it is either central or a significant factor, compared with 82% in Europe and 60% in North America.

However, they continue to trail in biodiversity adoption. Only 31% of Asian investors view biodiversity as central to their investment policy or as a significant factor today, compared with 57% in Europe, and 31% in North America.

When adopting ESG strategies, 40% of Asian investors said they are implementing thematic investing as a high or core priority and 31% are doing so as a low priority, making it the most popularly used method. The survey also found 31% of Asian investors are committed to reaching the 2050 net zero goal, compared with 40% of European investors and just 11% of North American investors.

The most important drivers of incorporating climate change into Asian investment strategies are demand from external stakeholders (49%) and the need to meet the expectations and requirements of governments and regulators (44%), the study found.

Investment opportunities

When it comes to decarbonisation, energy storage (77%), big data (69%), electric transportation (68%), electric network (67%) and low or zero carbon real estate (67%) are the most attractive investment opportunities identified by Asian investors.

For biodiversity, Asian investors stated that the following sectors are the most appealing: food security and nutrition (75%), biotechnology (74%) and healthy ecosystem (64%).

The lack of data and internal expertise remain the two biggest obstacles for Asian investors to implement decarbonisation and adopting biodiversity.

In terms of active ownership, 68% of Asian investors see net-zero carbon emissions as the engagement theme that will receive the greatest focus, followed by cyber security and food security.

Responding to the recent price surge in energy prices and underperformance of technology stocks, believes that is only for the short term.