Stockholm (NordSIP) – Since the beginning of the summer, global asset managers seem to be taking steps to use Singapore as their centre for sustainable investing operations in Asia. Schroders announced Mervyn Tang would lead its Asia Pacific sustainability team and head its newly created Regional Centre of Excellence for Sustainability, initially from Hong Kong and before moving to Singapore. Robeco also confirmed the creation of a team of three sustainability specialists that will also be based in Singapore.
To better understand the causes and implications of this rising trend, NordSIP reached out to Andy Howard Global Head of Sustainable Investment at Schroders and Nayan Patel, CEO of Robeco Singapore. Although Scandinavia’s sustainable investment experience is an inspiration to Asian investors, lessons can also flow east-to-west.
The Asian Appeal
“Asia is a key focus for our firm and for those sustainable investment efforts,” Schroders’ Howard explains. According to him, the importance of Asian markets and the nuances and distinctions of economies, industries and companies in the region has motivated Schroders to invest in on-the-ground Asian sustainable experts. “That expertise, in collaboration with our investment teams across Asia have built a platform of integrated funds across the region, as well as a growing range of funds focused on delivering sustainable investment outcomes to our clients in Europe and around the world,”.
Patel’s views echo those of Howard. “We are seeing exponential demands from our Asia clients for sustainable investing advice and solutions, almost every conversation we have with clients, regardless of institutional or distribution, involves some forms of sustainable investing topics. Having this team in Asia will help us better serve these growing clients’ needs,” Patel says. “With the expansion of our Singapore office, we are expecting to introduce more Asian versions of our sustainability-focused fixed income strategies, and these strategies will be available to not just Asian investors but also our global clients including European clients,” Patel adds.
Both Howard and Patel agree that in Asia, as in many other regions, Scandinavia is seen as a sustainable investment leader. “When we speak to clients in the region, they are always keen to understand the developments in other parts of the world. Scandinavia investors lead sustainable investing in many ways. Asian investors are definitely interested to learn about these latest ideas from Scandinavian investors and European investors,” Patel says. “In many cases, Scandinavia is further along the transition journey toward a more sustainable future than Asian countries,” Howard agrees.
“Scandinavian countries have painted a picture of the direction in which other countries will move in the future, for example through decarbonization efforts and the world-leading penetration of electric vehicles in the region,” Howard continues. “Another example is the interest in factor investing has increased substantially as a result of research in 2009 into the investment results realized by the Norwegian government oil fund,” Patel says.
However, lessons are not exclusively coming from Scandinavia to Asia. Given the complexity of the problem at hand and the diversity of experiences, Scandinavian investors, as well as global investors as a whole, can learn from Asia’s experience.
According to Howard, in other areas, the practical challenges are more nuanced in Asia. “Many Asian countries are at a very different point in their development and their paths will look different to that trodden in Scandinavia,” Howard explains. “Investors in both regions, and indeed globally, are looking at the steps that have been taken elsewhere and learning from what has worked and what has not, but I think also recognize that there is no single global blueprint and local knowledge and expertise is invaluable,” Howard adds. “There are many interesting developments here in Asia, hence I believe there’s definitely benefits for both corners of the world to learn from each other and we hope we can play a role in facilitating the conversation on the both sides,” Patel adds.
Regulatory Challenges and Net-Zero
Going forward, Howard discusses the importance of such sustainability challenges as climate change, inequality and governance. However, regulatory pressures will be dominant according to him. “There is a wider context of a fast-maturing field, where regulatory pressures on companies and investors alike are leading to more demands for measurement, transparency and clarity on funds’ investment goals and the outcomes they deliver. That trend is most obvious in Europe but is intensifying globally, and will benefit investors everywhere as sustainable investment moves from aspirational intent to demonstrable impacts.”
According to Patel, despite the perception of Asia as a high polluting manufacturing hub, a growing numbers of countries, including China, South Korea and Indonesia are committed to net-zero emission targets. “We believe Asia will follow the developed markets on a sustainable pathway, and it is important to position early. Currently our Asian Equities team sees exciting opportunities in the following sustainable development themes: tech enablers, growing middle class, wealth & financial Inclusion, as well as new energy & environment protection,” Patel concludes.