ESG a Key Growth Driver, Say Fund Managers in Singapore
2020 Set to Be a Profitable Year for ESG Investments
Adopting environment, social and governance (ESG) in investments will be a key driver in investment growth over the course of the next 3 years.
These findings were reported by the Investment Management Association of Singapore (IMAS) in a recent survey. At least 68% of Singapore’s fund managers shared this opinion in the survey which was conducted in mid-December 2019. This was an increase from the 47% reported in the previous year.
Increasing retirement needs and the emergence of more millennials as investors was the second key driver. Last year’s poll covered more than 50 respondents who were mainly chief investment officers or chief executive officers in various fund managing organisations. The purpose of IMAS’ survey was to determine what the top economic and geopolitical concerns were, along with the strongest business growth drivers and dominating strategies.
Another 2018 report by the Global Sustainable Investment Alliance (GSIA) claims US$17 trillion worth of assets had ESG integration. ESG strategies are becoming increasingly more prominent and 2020 is set to be a big growth year for ESG investments. Guidelines for these investments were developed by an IMAS working group and submitted to the Monetary Authority of Singapore (MAS).
While different organisations will have different timelines in terms of ESG integration, companies are managed better from an environmental or social perspective would likely reap the rewards of higher valuations. In a move towards the establishment of common standards for ESG, the European Union was expected to implement taxonomy for ESG by 2020.
As for the ongoing tensions between US and China, this will still be a major concern in 2020 for asset fund managers. The second concern was weak growth globally, together with dwindling growth expected in China.