Although Environmental, Social and Government (ESG) investing in Asia is considered next to Europe and the US, its quick maturation cannot be denied.
Over the last five years, cumulative flows into ESG products have reached US$260 billion – a record high. In the next decade, Asia is expected to drive half of all global consumption growth. Additionally, it is also posed to become home to one of every two upper middle income and above households.
While the rest of the world is still critical to the development of this industry, getting things right in the region will ultimately decide the long-term fate of net-zero and sustainable development efforts.
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It is important to note that more work still needs to be done to validate the value, nature, and impact of ESG-linked investment claims amid “greenwashing” scrutiny, as well as high investor expectations.
Failure to make progress in this aspect could undermine confidence in sustainable investment, and this is expected to have a huge consequence on its growth.
Recently, digitalisation has helped market participants advance sustainability efforts and ambitions. Now more than ever, individual investors hold much power over their financial lives and they are leveraging their access to real-time information.
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This has inspired the “democratisation of finance” which is currently in full swing today. Moreover, it has shifted the asset management landscape towards members of the “mass market” and younger individuals.
Some innovations that have impacted this shift include no-commission digital trading applications, as well as new low-cost investment vehicles.
Indeed, the retail investor segment in Asia has become very sophisticated. Soon, the demands for greater influence and choice in the region will only get louder.
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