Singapore, Japan investors less optimistic than Asian peers about ESG funds’ performance
Investors in South-east Asia are still more inclined to make future ESG investments, according to AXA IM
INVESTORS in Singapore are among those who have more tempered expectations when it comes to ESG (environmental, social and governance) funds, a new study by AXA Investment Managers (IM) found.
Findings from the study, released on Tuesday (May 21), showed that while investors in Asia generally have strong expectations over the performance of ESG funds, those located in Japan and Singapore are less likely to believe ESG funds would outperform the market.
In contrast, 48 per cent of investors in Indonesia and 63 per cent in Thailand are more positive about ESG fund performance.
The study said investors in South-east Asia are still more inclined to make future ESG investments. Notably, more than 65 per cent of Filipino investors and 44 per cent of Thai investors were found to be more likely to add ESG investments to their future portfolios.
That being said, the number of Asian investors who are optimistic about ESG funds has declined since 2021. The number of non-ESG investors in Asia who planned to invest in the sector in 2023 also fell, compared with 2021.
AXA IM noted a “marked decline” in the potential importance of ESG to non-investors. Current non-investors who may invest in the future would only consider ESG to be an important factor in a minority of cases, it added.
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Scepticism regarding the performance of ESG investments has been on the rise since 2021. Around 35 per cent of respondents expressed scepticism, compared with 27 per cent in 2021. There has also been a lack of clarity over the genuine sustainability of ESG funds, AXA IM said.
The asset manager noted an increase in mis-selling concerns in the region, which rose to 77 per cent in 2023 versus 71 per cent in 2021 among respondents.
“Strengthening trust and confidence in ESG assets will prove challenging unless investors acquire a deeper comprehension of the diverse ESG products and solutions, their specific goals, and an understanding of the underlying mechanisms,” said Jane Wadia, AXA IM’s head of sustainability for core products and clients.
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