Aussie ESG uptake growing at ‘rapid pace’
Adoption of environmental, social and governance (ESG) investing in Australia and New Zealand is growing at a “rapid pace”, according to J.P. Morgan Asset Management.
The asset manager said ESG investing was highest in Europe with an 8% compound annual growth rate but that Australia and New Zealand and Japan were catching up. Net inflows into sustainable funds in Asia was close to $8 billion in 2020, 10x that of the previous year’s inflows.
Tai Hui, chief Asia market strategist, said: “Signs indicate that Asia is catching up with growth in Japan overwhelmingly driven by institutional investors and the Bank of Japan with already strong ESG investing adoption in Australia and New Zealand continuing at a rapid pace”.
A key driver for ESG uptake in Asia was the number of ESG investment regulations in areas such as net zero emissions and carbon neutrality that were being adopted which would help create a sound infrastructure for sustainable investment.
The global energy mix would also need to become more diversified with increasing demands for environmentally-friendly fuels and energy combined with lower usage of coal and fossil fuels.
“ESG investing across Asia will become an even more prominent driver in the coming years as the value of assets under management increases. We expect ESG metrics will be increasingly integrated in asset managers’ investment processes, not only as a risk measure but also when considering the return metrics across investments.
“We believe there is still some mispricing in capital markets, and hence room for alpha remains for long-term investors,” added Hui.
AUTHOR
Laura Dew
Recommended for you
Family office Lederer Group has progressed its takeover bid for the Elanor Commercial Property Fund, lodging a bidder’s statement with ASIC as it says the fund has been “unable to agree” on negotiation terms.
Magellan Financial Group is keen to enact further strategic expansions with income from strategic partnerships tripling to $31.1 million from the addition of Vinva during FY25.
Outflows have doubled in the property and infrastructure space to $1.3 billion with advisers instead favouring private markets as Morningstar data finds active property funds are struggling to outperform.
Fund manager HMC Capital is seeking to expand fundraising for its private equity vehicle into wholesale platforms now that it has achieved a three-year track record, while scrapping plans for a second fund.
