Increasing shareholder activism is expected to play a crucial role in sustainable investing in 2023 as investors and asset managers become more resolute in pushing corporate and financial institutions to achieve sustainability targets, according to Federica Calvetti, head of ESG and strategic activism at Eurizon, the asset management unit of Italy’s largest financial group Intessa Sanpaolo.

The Asean+3 outstanding sustainable bond market topped US$598 billion in 2022, crossing the halfway mark to US$1 trillion for the first time, data from AsianBondsOnline (ABO) indicate. This represents a year-on-year (YoY) growth of 34%, slower than the 57.1% growth posted in 2021 as activity was impacted by tightening financial conditions. Compared with 2016, it represents a five-fold increase.

Global investment in the low-carbon energy transition totalled US$1.1 trillion in 2022 – a new record and a huge acceleration from the year before – as the energy crisis and policy action drove faster deployment of clean energy technologies, according to a new report. In another first, investment in low-carbon technologies appears to have reached parity with capital deployed in support of fossil fuel supply, research firm BloombergNEF (BNEF) says in its Energy Transition Investment Trends report.

There is growing evidence that global warming, particularly through its effect on agriculture, may create inflationary pressures, and that the physical and transition risks created by climate change could jeopardize financial stability. So, why is there no consensus among central bankers on how monetary policy should respond?

Global financial technology firm Broadridge Financial Solutions has launched a new environmental, social and governance (ESG) disclosure and data analytics comparison tool. Called ESG Analyser, the new web-based ESG disclosure and data analytics benchmarking tool promises to deliver timely, high-quality, cost-effective, transparent data and insights.

Investors line up to pump capital into credible corporate plans on climate transition

Far from being a short-term trend, sustainable investing is set to become a long-term growth story for the Asia-Pacific region, a new report finds. Other than banks, insurers and digital advisers are also likely start onboarding environmental, social, and governance (ESG) products on their shelves this year, bolstered by strong demand from wealthy investors, Cerulli Associates says. Three-quarters of distributors in Asia ex-Japan said in a survey that high-net-worth and ultra-high-net-worth clients are driving sustainable investments in the region, although some mass retail investors have also “shown interest” in ESG products, Cerulli says. While net flows into locally-domiciled ESG funds plunged to US$2.3 billion during the first half of 2022, or just a little over 7% of the total amount raised during 2021, Cerulli says it does not expect ESG investing to fall out of favour in the region. The below-average numbers from the first two quarters of 2022 can be attributed to regulatory initiatives across the region that aims to address greenwashing. Challenging market conditions also had an effect on lower capital deployed to ESG products during the period. Distribution deals Leena Dagade, Cerulli’s Singapore-based associate director, says research also indicates that over the long term, most funds will be ESG-integrated already, and innovation will instead take place in sustainability-themed strategies. “As the number of ESG products increases, positioning of fund ideas and marketing will need to be more focused to gain investors’ interest, while there should be continued dialogue with distribution partners to educate them about ESG and thematic investing,” Degade adds. Meanwhile, in terms of innovations in distribution models, Cerulli says some fund managers, particularly in Singapore and Hong Kong, are looking to gain a foothold by inking exclusive ESG product distribution agreements with local banks. This new distribution model will typically see banks exclusively distribute an asset management company’s product for a period of up to six months, Cerulli says, adding that the model means bank clients have exclusive access to some products. On the other hand, Cerulli says asset managers in Taiwan and Singapore are looking to tie up with insurance companies to distribute their ESG products. Digital advisers The firm has also noticed a rise in digital advisers expanding their offerings to include sustainability-themed investments. Since digital advisers typically cater to retail investors with small investable funds, these types of partnerships allow fund houses to experiment with bundling sustainability-linked products with low-cost offerings. An example of a digital adviser branching out to ESG products is StashAway, which introduced two new products in February 2022 – the Environment and Cleantech Thematic Portfolio and the Responsible Investing (RI) Portfolio. Both portfolios are made up of exchange-traded funds (ETFs) from some of the world’s top fund managers, such as iShares (managed by BlackRock), Amundi, ARK Invest, Global X, and VanEck. The products are currently available to StashAway clients in Singapore, Malaysia and the Middle East, as well as in Hong Kong and Thailand. In the same report, Cerulli says it is confident more APAC investors will allocate a portion of their assets to ESG funds as soon as markets stabilize. In turn, this will see more products registered in offshore markets like Singapore and Hong Kong.

Bonds via private placement can be offered to no more than 10 investors per issuance

Digital tech can incorporate feeds from multiple data providers, multiple data types

Regional regulators uniquely positioned to align, enhance ESG risk management, disclosure

Policymakers increasingly tout multilateral development banks as being uniquely positioned to address today’s pressing global challenges, particularly debt crises in the developing world. But their lending mostly benefits middle-income countries rather than the lower-income countries that need it most

Speeding up the adoption of already proven and scalable technologies, and exposing the many hidden costs associated with fossil fuels, is a necessary goal. Achieving it will require new policies to guide investments in the right direction, and techno-optimists ought to be the loudest advocates

The Asian Development Bank (ADB) signed a US$15 million loan facility with PT Dharma Satya Nusantara Tbk (DSNG) to help the company expand sustainable wood processing, rural livelihood development, and climate-resilient agroforestry in Java, Indonesia.