Most Asia Pacific asset owners, and as many as 90% of the world’s bigger ones, have accelerated sustainable investments in the wake of the coronavirus crisis, a “profound shift” that acknowledges outperformance of companies that focus on the environment, social responsibility and strong governance, according to new survey findings by MSCI Inc.
The index provider polled 200 global institutional investors, including 70 from Asia Pacific, in January on their environmental, social and governance (ESG) strategies as a result of the pandemic.
Among the Asia Pacific respondents, 79% have increased their ESG investments either “significantly” or “moderately”, MSCI says in a statement on February 19.
That’s slightly higher than the 77% for all respondents, though this figure jumps to 90% for large institutions with more than US$200 billion of total assets. MSCI says almost one-third, or 31%, of these large global investors expect climate risk to have the greatest impact on their investments over the next three to five years.
According to Baer Pettit, president and chief operating officer of MSCI, 2020 marked “a profound shift in the way institutions invest as many investors have recognised that companies with strong governance, environmental and social practices have outperformed during the pandemic”.
“The combination of climate-related events, such as devastating wildfires, floods and droughts, and a global pandemic have accelerated the paradigm shift to ESG and climate change,” he says in the statement.
Some 57% Asia Pacific investors expect to have completely, or to a large extent, incorporated ESG criteria into their investment analysis and decision processes by the end of this year.