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Wealth managers eye impact investing
Younger ultra-high net worth Asian investors are reinventing charity-giving
Tom King 1 Oct 2018

Leading wealth managers, including DBS Private Bank, is seeing a shift in the approach towards philanthropy. The momentum is being driven by the new generation of wealthy Asian millennials.

Younger ultra-high net worth Asian investors are reinventing the traditional cheque writing charity-giving of past generations towards a 'profits with purpose' form of investing.

As a result of the growing demand Singapore's largest bank has boosted its socially-responsible product offerings.

Tan Su Shan, group head of consumer banking and wealth management, DBS Bank elucidated on how the bank is growing a pan-Asian ecosystem to help 'NextGen' wealth clients meet their new philanthropic concerns.

It hasn't all been plain sailing. When the bank produced the first Women's Livelihood Bonds in 2017, the world's first social sustainability bond to be listed on a stock exchange, it really didn't work, it was a very hard sell, according to Tan.

However, since the launch Tan said the instrument has been performing well. A second tranche of the Women's Livelihood Bond Programme was launched in September this year in partnership with Impact Investment Exchange (IIX), targeting a total of US$100 million.

The bond impacts the livelihoods of over 385,000 women in Southeast Asia through micro loans.

Tan told The Asset the demand for impact investment products was now starting to grow.

"I think we can do more," she said. "But you've got to start first with the education, don't forget we also deal with 50 to 80-year old's who may not have been brought up in the same values and ethos of investing," added Tan.

She outlined how the investment priorities of older investors differed saying they traditionally looked at return on equity, at dividends and they look at credit rating and cash flow.

"We have to tell them, no, no, no, but this company is not doing the right thing for the environment." "I think that evolution will happen faster than we think, it's already happening," Tan said.

She believes her bank is at the forefront of this and will continue to plow ahead. But a lot of it is investing in education and time.

DBS though is also walking the talk on sustainability. One example of its commitment is instead of handing out another pen or thumb drive as a corporate giveaway the bank now features products made by social enterprises, supported by the DBS Foundation.

In its Indonesian operations for example DBS gives away traditional wicker craft goods made by social enterprise Du'Anyam which engages women to produce wicker craft, as an alternative employment to subsistence farming. DBS supports the enterprise.

Speaking at the World Bank meeting in Bali on October 12, Axel Weber, chairman of the world's largest wealth manager UBS, meanwhile articulated the same message.

Weber said in the past wealthy clients had given money to achieve a social purpose while forgoing a return on the investment. That is now no longer the case according to Weber.

"It's not necessary to forgo a return you can achieve both, you can be profitable and you can make an impact," he said.

Weber like DBS' Tan believes when the proper standards are in place, and markets for derivatives such as bond indices are developed, impact investing will truly take off.

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