Wealth Management

Good to grow: The rise of ESG investing in Asia

April 7, 2022 3-MINUTE READ

Overview
Digital Assets: Unclaimed Territory in Asia
Rise of ESG Investing in Asia
Empowering RMs with Tools They Need

Overview
Digital Assets: Unclaimed Territory in Asia
Rise of ESG Investing in Asia
Empowering RMs with Tools They Need

RESEARCH REPORT

In brief

ESG investing is poised to take off in Asia: the penetration of ESG investing among wealthy investors is likely to more than double in 2022 to 70%.
Investors across wealth bands mostly see ESG funds, ETFs and bonds as in-demand products but also think ESG investing is harder than it should be.
Many wealth management firms have yet to build up the fully integrated product advisory capabilities needed to benefit from this investment trend.

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ESG investing is in demand

Although Asia currently lags Europe and North America when it comes to investing along environmental, social and governance (ESG) lines, it is set to catch up fast according to Accenture research, driven by the impact of regulatory changes and investor demand.

Our latest wealth management survey in the region shows that 2022 could be a banner year for ESG in Asia, with the penetration of ESG investing among wealthy investors poised to more than double to 70 percent. Wealth managers should factor this growth opportunity into their strategies and offerings to reap the rewards.

Advisory is key ...

Across most wealth bands, our research found the key in-demand products for ESG investing are ESG funds, ETFs and bonds—though, interestingly, the wealthiest investors (US$10m+) rank private market ESG opportunities in second place.

However, investors say ESG investing is harder than it should be. Understanding the parameters of ESG investing is overly complex, there is insufficient information (for example, as regards historical returns), and firms offer too little in the way of product choice, according to our research.

Delivery by firms is another area that could be amended: Investors want an end-to-end advisory offering that integrates portfolio construction and modelling, standardized ratings and integrated reporting. Advisory, we found, was the most-valued service across countries, age, gender and wealth band.

… and Relationship Managers are frustrated

Relationship Managers (RMs) in our research said that 90 percent of their clients will be invested in ESG by the end of 2022—up from 51 percent in 2021. This is a substantial prize for those firms that could provide what their clients want.

Yet success requires giving RMs what they need to alleviate their frustrations. So, what do RMs need? Almost two-thirds ranked improved insights and data for their clients in first place. In second place are tools that allow integrated portfolio structuring and reporting, with better partner-based products and services in third.

The path to success

More positively, nearly four out of five (79 percent) of the wealth management firms we surveyed have ESG investing initiatives in place, and most of the remainder plan to launch such offerings in the coming months. In doing so, firms should provide what investors and RMs want: ESG product support, partnership and private market opportunities, and fully integrated portfolio advisory services. And while some firms already offer a combination of two or even all three, most do not.

"Firms need to refresh ESG capabilities, especially data, to build compelling propositions while ensuring RMs are trained and enabled to advise clients in this critical space."

— ALISON KENNEDY, Accenture’s Southeast Asia Strategy & Consulting Lead

Charting the way forward

Whether firms are just starting their ESG journey or scaling-up their ESG offerings, they need to:

Meet client needs and enable their RMs—by providing data, tools and training.
Differentiate themselves from the competition to carve out a unique and scalable position in what is already a crowded ESG market.

Lastly, as sustainability and ESG-related regulations will continue to evolve, and as global taxonomies converge, wealth management firms should look for partners in areas where they lack expertise to improve service delivery and future-proof their operations.