Interest in HK growing towards ESG, poll shows
But joint survey finds investors held back by lack of information and tools
Retail investors in the city are showing an increasing interest in sustainable investing, but they are hampered by a lack of information, tools and confidence in environmental, social and governance (ESG) products, a poll has found.
Nearly 55 per cent of the 3,770 respondents who were aware of ESG investment said they planned to invest in such products in the next 12 months, according to a joint survey conducted by Pictet Asset Management and Hong Kong University of Science and Technology (HKUST).
Some 75 per cent of those polled said they would allocate 10 to 40 per cent of their total investment to ESG products.
“We are starting to see more demand,” said Freeman Tsang, head of intermediaries for Asia except Japan at Pictet Asset Management. He added however that investors were held back by several factors, such as lack of education, types of investment categories and expectations.
Hong Kong’s market for ESG funds has been gaining traction, with net investment flows into the funds approved by the Securities and Futures Commission nearly doubling to US$40 billion last year, from US$21 billion in 2020, according to Morningstar.
Investors were beginning to prioritise values above returns in ESG investment, the survey showed. Over 70 per cent said they would prefer a product that met ESG standards even if the returns were 2 per cent lower than a non-ESG product.
But only 5 per cent of those polled had invested in ESG products at the time of the survey.
“One of the major reasons [for the low investment] is … the lack of information and a misconception of the returns of ESG products,” said Professor Tam Kar-yan, dean of the School of Business and Management at HKUST.
This aligns with other studies conducted last year on Asian retail investors’ understanding and attitude towards sustainable investing. Sixty per cent of investors across Asia-Pacific said the Covid-19 pandemic made them want to invest or save their money more sustainably, but 46 per cent said they did not have the tools or information to start, a Fidelity International poll in June found.
The poll of nearly 10,000 retail investors across the mainland, Hong Kong, Japan, Singapore and Taiwan, found 42 per cent were sceptical about the lack of accountability on whether firms would achieve their promises made on sustainability impact.
“We expect to see more ESG solutions being developed that address these investment needs, but it will take some time for the public to gain a better understanding of sustainable investing,” said Flora Wang, director of sustainable investing at Fidelity.
Currently, there is no unified standard or index to measure the impact of ESG investments. Various financial agencies have released their own frameworks for ESG impact reporting.
The diversity of standards has translated into apprehension.
A survey by Standard Chartered last year, which polled over 2,000 investors in Asia and Britain, found just over half remained apprehensive about sustainable investing.
“The inconsistent and patchy nature of data has created apprehension among investors about the actual impact of their investments,” said Marc van der Walle, global head of wealth management at Standard Chartered Bank.
“To increase adoption, investors need more standardised and clearly measurable outcomes.”