Asia Funds Say Socially Responsible Investment Faces Major Hurdles
Appetite for socially responsible investments in Asia is growing but fund managers say there are still major obstacles that prevent more significant investment in such assets.
Asia now has 71 signatories to the United Nations-backed Principles for Responsible Investing (PRI), from seven in 2006. Funds controlled by global signatories, many of whom invest in Asia, have surged to $59 trillion from $4 trillion in 2006.
While the numbers look impressive, a majority of asset owners haven’t implemented investment policies that follow environment, social and governance (ESG) best practices, according to a March paper by the PRI organisation on the need for asset owners to drive responsible investment.
The reasons: a focus on short-term returns; high cost of ESG research; a dearth of qualifying investments; and few repercussions for inaction.