China leads with ESG opportunities

Asian corporates may be lagging in terms of ESG disclosures, but Asia is not lagging in terms of climate-smart investment potential. According to the Institute of International Finance (IIF), Emerging Asia accounts for more than 80% of the USD23 trillion in climate-smart investments opportunities identified within the Emerging Markets (EM). Within Emerging Asia, China takes the lion’s share. Goh Rong Ren, Fixed Income Portfolio Manager, Eastspring Singapore, is not surprised. He points out that with China being the world’s largest user of fossil fuels and biggest automotive market, its transition to renewable energy and electric vehicles is highly relevant. Meanwhile, Michelle Qi, Head of Equities, Eastspring Shanghai, believes that policy support and regulatory changes will help improve the ESG information disclosure in China and foster an environment for greater ESG equity investing over time. 

Till then, local market knowledge will be key to help interpret corporate disclosures and guide investment decisions.

Across Asia, Rong Ren notes that electric vehicle manufacturers and renewable energy companies are already issuing more bonds. However, besides the transportation and renewable energy sectors, we believe that investors can also look to the real estate (new green buildings) and electric transmission/distribution sectors – areas which are also expected to present significant potential for green investments.

Climate-smart investment potential 2016 - 2030 (USD million)

April Chart of the Month gif

Source: International Finance Corporation. Climate Investment Opportunities in Emerging Markets.
Eastspring Investments. *Includes Philippines, Vietnam, Indonesia, Bangladesh and India.

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