January 22, 2020

More crazy-rich Asians consider ESG factors when investing: poll

Wed, Sep 11, 2019 – 12:18 PM

IT appears that there is more to crazy-rich Asians than blatant consumerism after all, if a new study from Royal Bank of Canada (RBC) Wealth Management is anything to go by.

Almost three-quarters of all Asian high net worth individuals (HNWIs), or 72 per cent, say that it is important to consider environmental, social and governance (ESG) factors when investing – much higher compared with their Western peers. Only about 43 per cent of Western HNWIs say the same.

The study also found that the younger generation of Asias high net worth families believe that they view wealth differently from their parents, with 69 per cent of them saying so. This is compared with just 56 per cent of Western HNWIs.

Michael Reed, head of wealth management, South-east Asia and chief executive, RBC Singapore Branch, explained that this divergence in Asia is attributed to a changing of the guard.

“In my experience, younger members of Asias global families, which are internationally mobile HNW families with financial interests that cross national borders, have been educated overseas and are returning to Asia with new ideas about how to manage family wealth,” he said.

“They increasingly see their investment activity as an extension of their ethical values, leading them to favour ESG factors.”

This is not to say that Western HNWIs do not favour ESG investments – quite the opposite.

Socially responsible investing (SRI) came about in the 1980s in Europe and then spread to the other Western markets, which later evolved into what is now considered mainstream practices.

“In Asia, however, ESG is a relatively newer concept, leading many of the clients I speak to in these markets being more likely to identify it as an active factor in making investment decisions rather than standard operating procedure,” said Mr Reed.

Even as more Asian HNWIs strive to do good, they are just as focused at growing their wealth.

More than 61 per cent of Asian respondents agree that their investment goal is “to increase wealth”, while only 45 per cent of HNWI respondents aim to do so.

Asian HNWIs are also more hands-on with their money; in Asia, 39 per cent of HNWIs classify themselves as “active investors” versus 29 per cent in the West, where passive investing is deeply entrenched.

This comes as fortunes in Asia are often younger than those in the West, with many families still in the process of building their wealth, according to RBC.

Asian HNWIs also seem to view the global economic slowdown more negatively compared to those in the West.

One particular worry for Asian HNWIs is the global economic uncertainty, with more than half (56 per Read More – Source

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