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Sustainable investments make up nearly a fifth of Asian HNW investors' portfolio: report

HIGH-NET-WORTH (HNW) investors in Asia have increased their allocation in sustainable investments to almost a fifth (19 per cent) of their portfolios, with China leading the way, according to a review by Standard Chartered Private Bank.

The survey covered 416 HNW individuals with a minimum of US$1 million in investments, residing in four Asian markets, namely China, Hong Kong, Singapore and India.

Within China, a majority of respondents have already allocated between a quarter to half of their funds to sustainable investments, the survey found. 

Value seekers, defined by StanChart as - those who have invested in sustainable investments, but still hold some misconceptions - remain the dominant sustainable investor type.

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The other investor archetypes include "Altruists", who are knowledgeable about sustainable investing and actively investing in it, as well as the "Unengaged", who are currently not involved in sustainable investing. 

StanChart also noted a new sub-category of "Aspirants", that comprise investors who claim to be engaged in sustainable investing, but have not yet started.

Among other things, the study revealed that investors' knowledge about sustainable investing continues to improve. In Asia, almost 30 per cent of investors can correctly define it, up from 20 per cent in 2018.

Similar to last year, Singapore continues to have the highest number of HNW investors (43 per cent) in Asia who are knowledgeable about sustainable investing.

Meanwhile in China and Hong Kong, there are improvements of 5 per cent and 15 per cent in understanding from last year to 18 per cent and 27 per cent respectively, StanChart said. 

Amongst the HNW investors, their top motivations were to 'create a better future' (81 per cent for Altruists and 63 per cent for the Value Seekers), followed by 'doing good while earning a profit' (76 per cent for Altruists and 55 per cent for Value Seekers). 

In particular, Altruistic investors are most motivated by energy and climate issues, while Value Seekers are most motivated by health and education goals.

Despite the willingness to engage in sustainable investing, there remain some barriers holding investors back, StanChart noted. In Asia, 41 per cent of the Unengaged cited 'lack of information about sustainable investing opportunities', while 40 per cent of the Aspirants echoed this view as the top reason for not engaging in sustainable investing.

Said Didier von Daeniken, global head of private banking and wealth management at StanChart: "It is encouraging to know that investors have more access to information on sustainable investing. Nonetheless, some misconceptions still exist, and this is where banks play a crucial role to educate and help investors overcome their barriers to investing for impact...

"We are committed to helping investors use their funds to bridge the annual US$2.5 trillion funding gap required to achieve the SDGs (sustainable development goals)."

StanChart also noted that in the third quarter this year, the bank will incorporate Environmental, Social and Governance (ESG) scores into its wealth management investment advisory trade notes for equities. This will allow clients to build in ESG considerations into their equity investments, the bank said.