Asia to play key role in development of responsible investing, says AXA
25 October 2012
News, Asia, Global
By Toby Garrod
Historical growth patterns in Asia suggest that awareness of responsible investing (RI) is set to grow rapidly here, as countries and companies in the region learn from the progress and mistakes made in the West, says Matt Christensen, Paris-based global head of responsible investment at AXA Investment Managers.
A discussion about how to create a more responsible model of capitalism is taking place across the world, he notes, opening up fertile ground for the global expansion of RI.
“We are seeing the continuation of the global financial crisis that started in 2008, and it continues to make the citizenry, investors, companies and regulators reevaluate what is good capitalism. What are the right rules to create long-term sustainable capitalism? This then feeds into a discussion that directly impacts the field of RI,” says Mr. Christensen. “What I expect to see, at the minimum, over the coming years, are incentives on a global scale that force more transparency on to investors and companies regarding how they look at these criteria. This is very much a long-term trend.”
While RI has been slow to take off in Asia, the opportunity for expansion is likely enormous. Assets in socially screened portfolios in the US stood at US$3.07 trillion by early 2010, a 34% increase since 2005, according to the US SIF's 2010 Report on Socially Responsible Investing Trends in the United States.
Mr. Christensen sees good reasons to expect rapid absorption of the ideas in the region: “We are still early in the game in this vibrant region, but the region has proven itself very capable of leapfrogging Western trends. In terms of investments in the environmental sphere, we can look at the energy sector. Many firms and countries have clearly thought, ‘let’s skip over some of the mistakes that other countries have made in the shift into cleaner technology’. That’s how China took over the solar cell market, for instance.”
He goes on to exemplify the ways in which strategic changes could take place.
“Discussions were going on for a long time in the West before strategic moves came about. In Asia I think we are seeing a direct shift to strategic considerations, and this phase will be completed much faster. The finance industry is going to move steadily in demanding the integration of environmental, social and corporate governance (ESG) factors into product design. At the fund management level, they are going to take it all the way back up to the investment committee at board level and say: ‘we need to have a policy regarding how we approach this across all of our asset classes’.”
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