Sustainability on the rise but adoption lags in Asia

Interest in sustainable investing in Asia is high, but adoption continues to lag, according to a recent survey by Lombard Odier, with more work needed to convert enthusiasm into action.

78% of High Net Worth Individuals (HNWIs) in Asia-Pacific have expressed interest in sustainable investing, according to Lombard Odier’s 2022 APAC HNWI study. Notable market leaders in the region are Taiwan (88%) and Thailand (93%).

However, the stock has not proportionally reflected this with 45% of HNWIs in the region holding less than 20% of sustainable investments in their portfolios. 12% aren’t even sure what level of sustainable investments they currently hold, while 17% hold none.

“Despite the great general interest, there is work to be done to capture this enthusiasm and translate it into concrete actions”, indicates the report by Lombard Odier. “In fact, the results of our study show that there is a direct correlation between the level of assistance provided by banks and the weight of sustainable investments in the portfolio of an HNWI.”

Entry barriers

Among APAC HNWIs who said they were not interested in sustainable investments, family interests were a major factor, with many members unconvinced of the benefits. 41% and 36% of respondents cited relative underperformance in financial returns and lack of a proven track record, respectively, as barriers to entry. A third still don’t know what sustainability is.

“The important message that emerges is that sustainability is taken seriously as an investment opportunity. However, the opportunity will only materialize if banks proactively reach out, engage, educate and clarify,” the report states.

Generational differences

Not surprisingly, younger investors tend to be more convinced of sustainable investing, with more than 80% of APAC HNWIs aged 18-34 expressing interest. In contrast, only 60% of people aged 70 or over said they were interested.

The motivation for sustainable investing also differs with more than 40% in the first group investing in a specific and passionate cause, against less than 20% in the second group.

Economy, Investments, Digital

Lombard Odier’s research also covered economic concerns, investment behavior and digital trends.

When it comes to the economy, APAC HNWIs cited rising inflation as the biggest risk (77%). Within their investments, market volatility is the top concern (50%), with 44% shifting away from traditional asset classes such as stocks and bonds to other areas such as private assets .

When it comes to digital investments, 83% of APAC HNWI portfolios invested 5% or less in cryptocurrencies, with only 20% looking to increase weightings.

About Emilie Brandow

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