With interest in ESG investing picking up in Asia, investors are now requiring more information to learn more about sustainable products, according to Julie Koo, Hong Kong-based Asia-Pacific head of managed investments at Citi Private Bank (pictured above).
“Clearly, the interest in this entire space is growing, I think quite exponentially arguably from a low base. But at this stage, what clients are asking for is information as they still lack understanding of ESG investments,” Koo said in a panel during an online media briefing organised by Natixis Investment Managers and Barron’s.
“Investors are really craving to get a better sense of what they should be understanding with regard to ESG and sustainability, even before they are able to think about it as a need to be part of their broader investment portfolio,” she added.
Koo likened the situation to buying a Frappuccino and a blueberry muffin from Starbucks.
“Going back in the days, people didn’t have public information on calories. They walk into Starbucks buying a Frappuccino and a blueberry muffin thinking it is a perfectly good way to start the day.
“But when that information was printed out and you look at that information, then it is an active decision for me as a consumer on whether I want what that data is telling me, assessing it against my health goals whether it is a sensible decision or not,” she said.
BUT NOT YET STANDARDISED
However, Koo acknowledged the difficulty of providing information to clients as data is not yet standardised globally.
“I know there is a lot that is still needed to be developed to make data more standardised and consistent. That is why we should all need to keep pushing to make sure that clients have all the information they need to make them decide how ESG investments align to the goals they are trying to achieve,” she said.
Koo added that regulators also play a key role in delivering more information for clients.
“If every regulator started to think about putting in measures to make information more transparent, I see that as a positive development,” she said.
Echoing Koo, Christine Kung, Securities and Futures Commission (SFC) Hong Kong’s head of sustainable finance, said that regulators should help out in making information more accessible.
“Regulation, to a large extent, will help to push forward all of these initiatives,” Kung said in the panel.
For example, senior management of listed companies in Hong Kong are now starting to be more aware of ESG issues because of the enhanced ESG disclosure rules that the Hong Kong Exchange put out this year, said Kung.
In May, the Hong Kong Exchange released a consultation about enhancing ESG disclosure requirements for listed companies. The exchange published in December its conclusions, and enhancements to ESG disclosures took effect in July.
“It is a journey, but it is a positive change,” Kung said.