Hong Kong investors see sustainable funds offering best of both worlds
Higher returns and better outcomes for environment, society
30 Sep 2020 | The Asset

Over one-third (40%) of Hong Kong investors regard sustainable funds as attractive investments because of the likelihood that they offer higher returns, according to a recent report.

The report, published by Schroder Global Investors, which surveyed more than 23,000 people globally, including 500 of them from Hong Kong, also found that 39% of investors favoured sustainable funds because of the wider environmental impact, and 29% said it was due to personal societal principles.

Hong Kong investors believe that they can contribute to a more sustainable society through their investments, with more than a third (38%) of them choosing to invest in sustainable funds rather than those that do not consider sustainability factors.

“It is exceptionally positive to see that many investors today believe that investing sustainably does not have to come at the expense of performance, and that people want their values reflected in the way they invest,” says Amy Cho, CEO, Hong Kong, and head of intermediary, Asia-Pacific, at Schroders. “ Our aim is to deliver not only returns for investors, but better outcomes for society as a whole.”

Access to information is key in helping investors understand the sustainable impact of their investments. Almost nine-tenths (89%) of Hong Kong investors wanted more information to reassure them that their investments are sustainable, whether this is from solution providers’ self-certification (36%), third-party endorsement of sustainable investments (31%), or regular updates from the investment providers (22%). In fact, 59% of Hong Kong investors said they frequently or occasionally asked their financial advisor for information around sustainable investing.

“Sustainable investing often means different things to different people, their personal beliefs are often a key part of this,” Cho adds. “For some, this may entail putting a greater investment emphasis on companies that place environmental issues at the top of their corporate agendas; for others, they may seek divestment from fossil fuel producers. Communication is therefore key; investors need to understand what investing sustainably really means and entails.”

With climate change being one of the significant challenges in sustainable development, Hong Kong investors ranked individuals such as themselves third in line (55%) as being responsible for mitigating climate change, behind national governments and regulators (66%) and inter-government organizations like the United Nations (62%).

When specifically asked what they think investment managers should do with regards to companies involved in the fossil fuel industry, 54% of Hong Kong investors think investment managers should leverage the influence they have by withdrawing funds from these companies.

In addition to expressing their beliefs in sustainability through investment, investors are also acting in their daily lives. Reducing or recycling household waste (52%) was found to be the most common way among those who wish to contribute to a more sustainable society. They would also buy locally produced goods that have lower carbon footprints (44%) and avoid businesses with poor social responsibility track records (42%).

Schroders, starting from this year, has incorporated the impact of climate change into its 30-year forecasts for different asset classes and markets.

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