Less than three in 10 investors in Hong Kong have heard of ESG investing or even know what ESG stands for, according to a survey by Pictet Asset Management.
The main reasons for not investing in sustainable vehicles include “scepticism about the returns of ESG products”, “none of my friends and peers invest in ESG products”, and “do not care about negative ESG impact”.
Presenting the survey findings at a media briefing attended by our sister publication Fund Selector Asia, Tam Kar Yan, dean of the School of Business and Management at Hong Kong University of Science and Technology (HKUST Business School), said the key to promoting sustainable investing is in education.
This includes increasing ESG awareness among the Hong Kong population, starting with potential investors, educating the public with the “correct concepts” about ESG investing, and getting the younger generation on board with ESG investing.
Freeman Tsang, head of intermediaries, Asia ex Japan at Pictet Asset Management, echoed Tam’s views that investors’ education on sustainability is crucial.
“For asset managers, we can work with third parties like HKUST to understand our potential clients. Then we can enhance our education through public media, our website, and distributors to attract more attention,” he said.
Pictet Asset Management and the HKUST Business School conducted a survey at the beginning of the year and collected 3,770 responses across different social demographic sectors.
Findings
Individuals with higher monthly income are more aware of ESG, the research found. Among those who earn HK$70,000 (£6,783, $8,946, €8,139) and above in monthly income, 47.8% are aware of ESG investing, compared with 28.2% of those with monthly income below HK$70,000.
“ESG is currently not a familiar concept among the Hong Kong population with only a very small fraction currently investing in ESG products,” said Tam.
“Given the importance of ESG in shaping a better world and building a sustainable future, there is a strong need to increase the society’s awareness of ESG.”
The top reasons to invest in ESG products are: “ESG is the trend to come and I want to capture the opportunities”, “ESG investment brings long-term benefits to the company. environment and society”, and “the focuses of ESG products align with my personal values”.
Lack of action
While some investors are aware of ESG investing, the survey also found there is a gap between awareness and action, with only 5% of the respondents currently investing in ESG products.
But more than half of those who are currently not investing in ESG products, although aware of it, are planning to invest in ESG products within the next 12 months.
Among potential ESG investors, close to 75% of them expect to allocate 10% to 40% of their total investments to ESG products.
The survey also found that a significant percentage of investors (73.8%) who are not invested in ESG strategies now are willing to consider allocating to ESG products if they can contribute to sustainable development and bring more positive environment and social impact.
“Globally, strong demand [for ESG products] is shifting from institutions to private banks and retail investors. Hong Kong investors show highest interest in themes on global environmental opportunities and clean energy,” said Tsang.
“Looking ahead we expect themes related to the ‘social’ aspect in ESG to gain more attention, such as those investing in smart city and the future of food.”
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