Schroders Global Investor Study 2021: Investors in Hong Kong emphasise impact over profit in sustainable investments

Environmental impact has overtaken investment returns as the most important consideration in sustainable investments among Hong Kong investors, the Schroders Global Investor Study 2021 has found.

The annual flagship study, which surveyed over 23,000 people from 32 locations globally, including 500 of them from Hong Kong, revealed that 46% of Hong Kong investors regarded sustainable funds as attractive as they would make a wider environmental impact. The likelihood for higher returns (33%) and alignment of personal societal principles (32%) were also among the most critical factors for seeing the appeal of this type of investment.

Such findings can be attributed to the sharpened focus on environmental and social issues among Hong Kong investors following the outbreak of the COVID-19 pandemic, with 58% and 60% of respondents admitting a tilt in attitude over these issues, respectively.

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In addition, frequent natural disasters happening around the world highlighted the pressing need to address climate change, with the latest IPCC report indicating that this frequency will only increase.

Hong Kong investors are increasingly expecting global actions to be taken by various stakeholders to tackle the challenges the entire human race is facing.

They expressed that national governments and regulators (67%), inter-governmental organisations like the United Nations (63%), and companies themselves (51%) should be responsible for mitigating climate change, but they also think investment managers and major shareholders (49%) and themselves as individuals (46%) should do their part.

Amy Cho, Chief Executive Officer, Hong Kong and Head of Distribution, Asia Pacific, Schroders commented:

“Globally, Schroders launched our first sustainable strategy focused on climate change back in 2007. The strategy invests in companies that recognise the threats from climate change and embrace the challenges early, or that form part of the solution to the problems linked to climate change.  Since then, Schroders has expanded the suite of offering from sustainable credit to sustainable multi-asset strategies.  In terms of where we see strong client interest, climate change and the energy transition have really picked up in recent years given the global attention the topic is receiving.” 

Meanwhile, 41% of Hong Kong investors said that regular reporting highlighting the impact their investments are making, and seeing some form of self-certification from the investment manager that their investments are sustainable (35%) would motivate them to increase their sustainable investment contributions.

Mervyn Tang, Head of Sustainability Strategy, APAC, Schroders commented:

“It is encouraging to see Hong Kong investors’ growing desire to positively impact society and the environment through sustainable investments.  Schroders’ award-winning SustainEx tool helps investors to understand the impact of their investments, by putting a financial value on all of the impacts that companies have on society. SustainEx is part of a suite of tools we call impactIQ, which helps us to quantify the sustainability risks and impacts of assets we invest in from multiple perspectives, including how well companies are aligned to the climate goals set by the Paris Agreement.  These tools have helped us to fully integrate ESG factor into the decision-making of not just ESG-themed strategies, but across all our investments since 2020.

“We believe that the financial industry holds a significant role to initiate capital reallocation across both listed and private assets, driving progress through sustainable and impact solutions. Active global investment managers will certainly have enormous influence via the financial system, which involves the redirection of money away from harm, investment in companies that are adapting to a new world and contribution to solutions.

“At Schroders, it is through our regular dialogue, engagement and voting with the companies we invest in that we actively influence corporate behaviour. Ultimately, we trust that this is what helps protect and enhance the value of our client’s investments. In 2020, we held over 2,150 sustainability-focused engagements, interacting with over 1,490 companies across 58 regions.  During the same period of time, we voted on approximately 99% of total resolutions, and instructed a vote against management at 36% of meetings.  In total, we voted on over 6,500 meetings.”

To find out more about Schroders Global Investor Study 2021, please click here.

*In March 2021, Schroders commissioned an independent online survey of over 23,000 people who invest from 32 locations around the globe. This spanned countries across Europe, Asia, the Americas and more. This research defines people as those who will be investing at least €10,000 (or the equivalent) in the next 12 months and who have made changes to their investments within the last 10 years. Due to this threshold, Schroders acknowledges that this group and therefore the research findings are not representative of everyone’s experience of the pandemic.

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