80% of Singapore investors believe in ESG, but only a quarter take action: survey

THE lack of suitable sustainable investment products and limited investor knowledge are major barriers to sustainable investing in Singapore, an HSBC survey showed on Thursday.

While 80 per cent of Singapore investors believe sustainable, environmental and ethical issues are central to managing their investments, there is a "significant" gap between what investors believe and their actions - only a quarter of their investments consider ESG (environmental, social and governance) factors, according to the survey.

This might be due to a lack of knowledge on ESG investing. About 66 per cent of investors in Singapore said they do not want to lose out financially when tackling ESG issues, while 58 per cent noted that although they would like to do more, they do not know how to approach this as an investor.

"While awareness for ESG issues has increased, there is still a significant gap between investors' intentions and actions in sustainable investing. However, we believe this can be a signal to future demand," said Patrice Conxicoeur, chief of HSBC Asset Management in South-east Asia.

Despite an increase of ESG funds in the market, almost half of investors in the Republic pointed to a lack of sustainable investment products that meet their needs and concerns. About 38 per cent cited high costs as a hurdle, while 36 per cent do not want to limit the range of sectors or companies they invest in.

Financial advisers surveyed said about half of their clients see ESG investments as important. They pointed to a shortage in suitable products as the biggest barrier, followed by a lack of client demand for sustainable investment, indicating the need to raise the understanding of ESG investments among advisers.

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Overall, most investors advocated for a wider range of investment vehicles and strategies using ESG, as well as more information on what sustainable investment is and how it works.

In the next three to five years, 46 per cent of investors believe their portfolio will comprise 100 per cent sustainable investments. The key drivers for future take-up of ESG investments include products matching risk and return goals, a wider range of ESG investment vehicles and strategies, government incentives, and better information on investment performance and ESG issues, according to HSBC.

"Investors are clearly calling for more tailored and targeted ESG products and we will continue to expand our product suite to meet their growing demand," said Mr Conxicoeur.

HSBC's latest survey was conducted among mass affluent and high-net-worth investors as well as advisers in Hong Kong, mainland China, Singapore and the UK.