Sedgwick Richardson and Mayer Brown are pleased to share the results of our recent Sustainable Asset Management in Asia survey in this Sustainability Pulse Check.
As interest in sustainability continues to grow worldwide, much of the focus has been on Europe and the United States. From the explosive growth of flows into funds classified as Article 8 or 9 products under the Sustainable Finance Disclosure Regulation (SFDR) in Europe to pending climate-related disclosure requirements in the United States, there is no shortage of developments in these regions affecting the asset management industry.
The landscape in Asia, however, is also evolving in significant ways. Hong Kong and Singapore have developed sustainability-related regulations that require covered asset managers to incorporate climate-related and environmental risks into the investment process and make related disclosures. The Association of Southeast Asian Nations has developed the ASEAN Taxonomy for Sustainable Finance, and there are over 175 SFC-authorised funds that incorporate environmental, social and governance (ESG) factors as their key investment focus in Hong Kong (as of 12 March 2023).
To bring the Asian context into focus, we surveyed asset managers active in the region to understand how they approach this issue from compliance, strategy and branding perspectives. The results from 26 asset managers highlight some key stakeholder groups driving sustainability in Asian asset management firms and the diverse ways asset managers respond. We also identified some of the barriers asset managers face when developing or enhancing sustainability strategies and the challenges they encounter when seeking to comply with sustainability-related regulations. In each case, the results reflect the impact of global trends on asset managers generally, as well as the unique influence of stakeholder groups, markets and regulations in Asia.
Our Respondents
Responses were collected from December 2022 to February 2023. Our respondents ranged from early-stage venture capital investors formed in the past several years to some of the region's most influential fund managers with AUMs in the billions of U.S. dollars. About half of our 26 respondents are private equity investors, with the remaining respondents comprised of a mix of credit, real estate, hedge and multi-strategy investors. The vast majority say they have increased their emphasis on sustainability over the past two years.
The following pages set out the questions asked and responses we received, as well as opportunities and actions for asset managers informed by these insights.
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