Only 1% of 411 investors surveyed in Hong Kong have purchased any dedicated ESG product. The same goes for investors in Guangdong, in which 1% of 615 investors have invested in such products.

Source: HKIFA

The reasons for not investing in such products are different for Hong Kong and Guangdong investors. In Hong Kong, it is about lack of ESG product understanding, while in Guangdong, it’s the perception that ESG companies have low profitability.

Source: HKIFA

The survey noted that when investors were asked about whether there is any relationship between ESG and investment returns, close to one half are neutral: they think it depends on the company’s specific situation and on whether an ESG policy will have long-term benefit for the company. Those that are not sure or don’t know account for 25% – 30% of respondents.

Source: HKIFA

“The survey indicates that a lot of educational efforts have to be made to increase awareness and understanding of ESG amongst the retail public,” HKIFA said. “Traditionally, there is the perception that ESG is about exclusion and that there will be a trade-off, at the expense of returns.

“Exclusion is only one of the approaches, and there is a whole array of tools and approaches, such as engagement and transition management, which are increasingly being integrated into the investment management process.”

HNW preference

In terms of interest, Guangdong investors are more likely to invest in ESG products than Hong Kong investors, according to the survey.

Source: HKIFA

The report noted that it is the more affluent respondents who are more interested in ESG products. In Hong Kong, 29% of the respondents who have a monthly personal income of at least HK$100,000 ($12,750) have expressed interest, while there is zero interest for those with income below HK$10,000.

In Guangdong, 60% of the respondents who have a monthly personal income of at least RMB 100,000 ($14,775) expressed interest, while the percentage goes down to 32% for those who have income below RMB 10,000.

The adoption rate is still low among Hong Kong’s high net worth individuals, according to a separate survey conducted by UBS Wealth Management last year. Although 85% of them are interested in sustainable investing, around 79% are concerned about the fees charged by such products.

– This article first appeared on Fund Selector Asia, ESG Clarity‘s sister site.