The rise of profitable and sustainable investments in Asia in 2019

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As a growing number of people become acutely aware of the need to protect the environment, the demand for goods and services that are sensitive to such inclinations will undoubtedly increase.

A 2017 report by Singaporean financial services group, DBS and the United Nations (UN) has indicated that ASEAN’s total green financing opportunities lie at US$3 trillion between 2016 and 2030. Investments in green infrastructure make up 60 per cent of this amount.

Countries with existing large grids but want to improve transmission of electricity like Vietnam, Indonesia and Thailand also offer a lucrative potential for investment.

Water is also an essential green infrastructure investment avenue in places like Indonesia, and the Philippines as Southeast Asia’s water market is slated to grow 20 per cent annually. The technology risk associated with such an investment is quite low given that technologies utilised in water treatment plants, dams and flood control waterworks are relatively established.

Read more on the Sustainability investment potential in the ASEAN

Our entire planet faces sustainability challenges. In Asia, despite extraordinary progress in the past half-century, problems of poverty, hunger and environmental degradation, and weaknesses in healthcare, schooling and infrastructure are still prominent.

Devising solutions to these problems presents a financial opportunity, and Asian people have shown a growing interest in sustainable investing—earning compelling returns through investments that are aligned with sustainable causes.

Our latest UBS Investor Watch survey of millionaires globally revealed that many Asian investors, particularly those in China, already have sustainable investments in their portfolios.

Even among investors who have not yet adopted this strategy, 85 per cent of Hong Kong and Singapore millionaires say they’re interested. That said, there are still barriers, as investors in the region worry that the practice is not established enough and whether these investments can make a measurable impact.

To align investments with social and environmental impact, part of the journey towards making sustainable investing a mainstream practice, financial institutions in Asia and globally must first establish common standards and definitions to reduce confusion.

Secondly, providers should showcase the level of financial returns that can be expected from sustainable investments, which should perform similarly if not better than traditional investments.

Thirdly, fund managers need to offer more sustainable products across asset classes. For instance, very few funds currently offer private investors exposure to products such as the development of bank bonds, which offer attractive yields, high credit ratings and an explicit focus on sustainable causes. Fourthly, wealth managers must engage investors and help them find investments that suit their risk appetites and values.

Committed to leadership in sustainable investing, UBS has taken numerous steps that will help drive the entire financial industry towards a new sustainable standard.

The United Nations has set the world 17 Sustainable Development Goals (UNSDG) for the year 2030, the last of which involves revitalising partnerships for sustainable development. In the spirit of this UNSDG, it is time for Asia’s investors and institutions to work harder on productive collaborations that will make the world a better place by 2030 and beyond.

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