Challenging ESG landscape in Asia

In recent years, the adoption of ESG investing has accelerated sharply. Of the 180 asset managers responsible for $21 tn in assets surveyed by Macquarie in 2019, 71% said ESG factors “governed” or “had considerable influence” over investment decisions.

However, investors need to be more clear-headed about what ESG investing stands for and what it is supposed to achieve for its stakeholders, Nikko Asset management writes in a recent insight in which the Asian Equity Team took a look at ESG through an Asian lens. The complex and fast-changing economies are a challenge for investors looking to apply ESG analysis across Asian asset classes. According to Nikko, however, this also creates opportunities if you look closely and understand the market.

As one example, the Asian Equity Team names corporate governance: “Asian companies often have ownership structures that differ from those in developed economies. In Asia, majority ownership, either by the state or founding families, is predominant. Assessing governance must then be conducted less according to market-oriented norms, but by applying a more granular understanding of the objectives, character, and motivations of the majority owners, whether state or private.”

Read the full analyses at Nikkoam.com.