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Asia investors see inconsistent ESG scores as key barrier, Capital says

Capital
By Hui Ching-hoo   
October 25, 2021

Institutional investors in Asia Pacific are deterred from sustainable investments because ratings firms do not provide consistent scores for environmental, social and governance (ESG) factors, according to survey findings by US asset management firm Capital Group.

The company polled 1,040 global asset owners in June, including around 29% based in Asia Pacific, about their ESG investing.

For 46% of the Asia Pacific respondents, lack of consistent ESG scores from ratings firms is a stumbling block to incorporating research data into their investment decisions.

“While investors appreciate the importance of ESG integration – and qualitative analysis and engagement by active fund managers – they also report that the lack of robust and consistent data is the main challenge when investing in ESG,” Jessica Ground, Capital Group’s global head of ESG says in a statement on the survey findings on October 22.

“It’s understandable that as ESG becomes more important to these investors, the desire to be rigorous in their assessment of ESG grows,” she adds.

Some 45% of investors in Asia Pacific and globally cited scarcity of robust ESG data as one of the main barriers for ESG adoption.

Around 29% of investors in Asia Pacific and 27% globally ranked difficulty accessing the information they need as the leading challenge in implementing ESG.

Meanwhile, 46% of Asia Pacific respondents said lack of product innovation is holding back greater adoption of ESG, compared to 35% globally.

Los Angeles-based Capital had US$2.6 trillion of assets under management as of June 2021.