Author: Sun Danying, Director of Wealth Management and Personal Banking, HSBC China
Since China put forward the goal of "carbon peaking and carbon neutrality", the growth of domestic ESG investment has accelerated significantly.
More institutional investors and asset managers are taking environmental, social and corporate governance factors into account in their investment decisions.
The continuation of the epidemic has also caused more and more individual investors to rethink their investment concepts and examine their investment methods from the perspective of sustainable development.
A survey released by HSBC Investment Management in 2021 shows that in Asian markets such as Mainland China, Hong Kong and Singapore, an average of 64% of individual investors surveyed said that the new crown epidemic has increased their awareness of the importance of ESG investing, while prompting them to re-engineer. Evaluate investment methods.
About half of individual investors surveyed in Asian markets believe that their portfolios will include sustainable investments over the next three to five years.
In fact, the popularity of ESG concepts has had a positive impact on the investment strategies of institutional investors.
The Global Sustainable Investing Alliance (GSIA) estimates that global ESG assets exceed $35 trillion.
In addition, the number of signatories to the United Nations Principles for Responsible Investment (PRI) has continued to grow to over 4,000, with total assets under management exceeding $120 trillion.
More than a quarter of the world's professionally managed assets have adopted ESG investment strategies, and major institutions are closely deployed on the ESG investment track.
For individual investors, ESG investment can contribute to sustainable development and participate in the low-carbon transformation of the global economy while creating wealth.
Analysis by HSBC Global Research shows that 40%-50% of the medium-term factors driving company performance are related to ESG.
Companies that do better in ESG usually have more long-term plans, and their managements tend to be more forward-looking, making it easier for them to outperform in the long run.
However, despite the increasing awareness of individual investors on ESG issues in recent years, there is still a clear gap between awareness and action.
According to a recent survey by HSBC, nearly 90% of investors surveyed in mainland China believe that ESG is very important, but only a quarter of them take it into consideration, and nearly 60% of investors say they do not understand how to invest in ESG.
Therefore, this field has huge potential and rare opportunities for individual investors, but it is imperative to understand the characteristics of ESG investment and grasp the “investment method” of ESG.
Compared with traditional investment, ESG investment can quantify and standardize various sustainable development indicators, which is more feasible.
We believe that investment products and businesses that prioritize ESG are better protected against risk.
Whether it's the post-pandemic economic recovery or based on long-term performance assessments, the resilience of sustainable investing is obvious to all.
The common ESG investment strategies in the world each have their own unique concepts.
At HSBC, we advocate for ESG to be considered at all stages of the investment process.
HSBC's due diligence and research team will work closely with product providers to evaluate ESG performance from both the company and product levels, and select long-term high-quality companies through the company's attitude towards ESG issues and ESG strategies to help customers build a more balanced , a more diverse portfolio of assets.
In China, the existing ESG investment products are mainly mixed and fixed income, and some professional ESG index products have been recognized by customers.
Since ESG investment has just started, although there are more and more products emphasizing green strategies and concepts, there are not many who really strictly implement ESG strategies, and the transparency and depth of information disclosure of many related products needs to be improved.
It is foreseeable that with the maturity of the domestic financial market and the deepening of international financial cooperation, the ESG evaluation standards at home and abroad will gradually integrate and develop, and the level of ESG information disclosure at the enterprise and product level is expected to increase rapidly.
A more mature and clear evaluation system standard will undoubtedly further enhance the attractiveness of ESG investment products and drive more domestic and overseas funds to enter the domestic ESG investment field.
On the other hand, the younger generation is increasingly concerned about environmental and social issues, which will also promote the development of domestic ESG investment from the demand side.
There is huge potential in the field of ESG investment. Individual investors who adhere to the concept of value investment can take ESG into investment considerations on the basis of fully understanding the product and according to their own conditions. opportunities to achieve long-term stable investment returns.