62% of Malaysians prefer sustainable portfolio investments

The report highlights that awareness on sustainability and social issues among investors in Malaysia has increased during the pandemic

by AZALEA AZUAR / Pic by TMR FILE PIX

THE impact of the global pandemic has sharpened South-East Asian investors’ focus on environmental and social issues despite calls for greater sustainability-focused performance data, the Schroders Global Investor Study found.

The sustainability-focused findings of Schroders’ flagship study, which surveyed nearly 24,000 people from 33 locations globally including Malaysia, Singapore, Thailand and Indonesia, found 67% and 66% of South-East Asian investors respectively (versus 57% and 55% globally) are now placing greater importance on social and environmental issues.

The report highlighted that awareness on sustainability and social issues among investors in Malaysia has increased during the Covid-19 pandemic.

“Sentiment around moving to a sustainable portfolio assuming the same level risks to diversification is at 62%.”

More Malaysians feel positive about the idea of investing only in sustainable funds due to such funds holding greater appeal, in particular on environmental impacts.

“66% people are attracted to fund such funds because of wider social impacts, 45% of such funds more likely to offer higher returns and 44% feel such investment supports society principles,” the report noted.

Malaysians also want to see proof of better returns (66%), having financial advisors providing them with more information on sustainability preferences (52%) and self-certification from the provider of the investment that it is sustainable.

In an event of a corporate disaster, most Malaysians prefer to withdraw their money during a financial or accounting scandal (65%), followed by data privacy breach or cyber hack (62%), climate change catastrophe (59%), human rights scandal (57%), scandals that relate to the treatment of the company’s staff (56%) and internal culture (52%).

The Schroders Global Investor Study further found that nearly half of these investors (47%) prefer managers that advise them whether their investments are sustainable, while the rest felt regular reporting highlighting the impact their investments are having would motivate them to increase their sustainable investments (46%).

“The Covid-19 pandemic has brought climate change issues forward, which in turn ramped up sustainability efforts among SouthEast Asia’s key players.

“For instance, Singapore Exchange (Ltd) has proposed mandating climate disclosures in accordance with the Task Force on Climate-related Financial Disclosures, while Thailand’s Securities Exchange Commission will introduce mandatory environmental, social and disclosure disclosure requirements in 2022,” the report added.

67% of South-East Asian investors (versus 57% globally) are feeling positive about moving to an entirely sustainable portfolio, so long as the same level of risk and diversification is maintained.

Globally, this was most pronounced with younger people aged between 18 and 37 (60%). This sentiment was mirrored strongly by investors in Thailand (76%), which topped the global list, and Indonesia (72%).

According to Schroders Global Head of Sustainable Investments Andy Howard, these findings have displayed the growing expectations that are now being placed on asset managers when it comes to addressing climate change.

“We are focusing on ensuring the investments we manage for our clients are aligned to the transition toward a more sustainable planet and benefit from the opportunities that transition will bring.

“As investors and guardians of our clients’ assets, we seek to actively influence corporate behaviours so that the companies in which we invest are sustainable and resilient,” he said.

Howard believes there is still clearly more to be done to demonstrate to investors that a sustainable focus does not have to compromise returns despite this greater profile for asset managers.

Schroders has observed a sustainable value creation, which is linked to successfully navigating social and environmental challenges.

Other highlights in this study also include that pressure for investors to address climate change has been growing on almost all key global stakeholders, which include governments, companies and even asset managers to mitigate the impact.

Hence, a majority of South-East Asian investors (77%) believed that this responsibility should be handled by the government and regulators.

Another 74% felt that corporations should be responsible in tackling climate change, but the biggest change in sentiment over the past four years has been the growing role expected of asset managers.