Despite the growing trend of sustainability, asset owners in Asia believe there is still much more to desire with lacking products, insufficient accountability and other issues, according to a recent survey by Willis Towers Watson.

Nearly 40 percent of respondents expressed concerns about the sufficiency of appropriate ESG-focused products and services in the marketplace, according to the report titled «Willis Towers Watson ESG Beliefs and Practices Survey 2021: Asia». 

As a result, just over 10 percent of portfolios are invested in ESG assets or ESG-related strategies compared with the desired level of 30 percent.

Insufficient Accountability

In addition to a lack of products and services, asset owners are also lacking the accountability required to ensure discipline in sustainable investing. 

Currently, only 31 percent of Asian investors have an ESG policy statement in place.

41 percent of asset owners agree that they are not held accountable by stakeholders for reporting on ESG issues beyond financial reports though 57 percent expect greater pressure from regulators and stakeholders to disclose and improve ESG practices over the next 12 months.

ESG Focus

Nonetheless, most Asian investors remain aligned with the global trend of sustainable finance.

44 percent of respondents said that incorporating ESG practices into the investment process is one of their top three goals for the next few years with 71 percent selecting governance as the main area of focus, particularly with regards to disclosure and reporting.

«As regulations around disclosure such as the Task Force on Climate-Related Financial Disclosures (TCFD) become mandatory and more tangible, asset owners will likely also expect their asset managers to report on climate risk metrics,» said Willis Towers Watson’s Asia head of investments Jayne Bok. «However, the most popular motivator for including ESG beliefs and practices is to improve the resilience of the portfolio.»

The survey covered responses from 63 organizations in the region with nearly half housing over $1 billion in assets under management. Most respondents were based in Japan (48 percent) followed by Hong Kong (16 percent) and South Korea (8 percent).