Asian asset owners will likely maintain allocations to environmental, social and governance investments this year, focusing on sustainability financing and climate transition, according to Joanne Khew, head of sustainability at Singapore-headquartered Eastspring Investments.
Institutional ESG investing is becoming more prominent in Asia, aligning more closely with peers in developed countries, but with their own unique approach, she says in an interview with Asia Asset Management.
She expects Asian asset owners to canvass the market for more innovative ESG ideas with an increased focus on nature and climate adaptation. Climate transition and sustainable financing are likely to be at the forefront of these initiatives, reflecting an increasing maturity and sophistication of responsible investment practices in the region.
A survey by Morgan Stanley in November found that 80% of global institutional investors increased allocations to sustainable investments last year.
Meanwhile, Khew says Asian asset owners are demanding greater clarity from their asset managers on performance metrics and risks in sustainable investments.
She expects fiduciary duties and investment risks to become a key focus for asset owners when evaluating ESG investments.
“Many [Asian] asset owners already have a baseline understanding of their ESG policies and expectations for their managers’ ESG integration practices,” she says. “Some may even take a step further by setting their own specific sustainable investing targets.”
Eastspring has developed a climate transition investment framework in collaboration with Prudential plc as a transparent methodology for investor evaluation.
According to Khew, the framework is designed to help investors identify and capitalise on opportunities as companies shift their business models toward a more climate-ready future.
She also notes that ESG-themed mutual funds and exchange-traded funds are becoming more accessible to retail investors in Asia through various investment platforms.
According to figures from PricewaterhouseCoopers, global ESG mutual fund assets grew at a compound annual rate of 8.5% to US$2.08 trillion over the last eight years.
Eastspring, the investment arm of Prudential, managed $286 billion of assets as of end-September 2025.
