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PETALING JAYA: Sustainability is more important now than before the pandemic in Malaysia as a climate change catastrophe like oil spill and emissions scandal is one of the top three corporate disasters that would result in Malaysians withdrawing their investment, the Schroders Global Investor Study has found.

It revealed that people in Malaysia feel positive about the idea of investing only in sustainable funds, with 62% having a positive sentiment around moving to a sustainable portfolio, assuming the same level of risk and diversification.

This year, Malaysians are attracted to sustainable funds because of the wider environmental impact (66%), they are more likely to offer higher returns (45%) and their societal principles (44%).

The top three factors that would encourage people to increase their sustainable investments are data/evidence that shows investing sustainably delivers better returns (66%), my financial adviser providing me with more information on funds aligned with my sustainability preferences (52%) and self-certification from the provider of the investment that is sustainable (45%).

More than elsewhere, the impact of the global pandemic has sharpened Southeast Asian investors’ focus on environmental and social issues despite calls for greater sustainability-focused performance data, the study has 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 that 67% and 66% of Southeast Asian investors respectively are now placing greater importance on social and environmental issues. However, 65% still believe that data/evidence demonstrating that investing sustainably delivers better returns would encourage them to increase their allocations.

A further 47% of investors would like to see some form of self-certification from the investment manager that their investments are sustainable, while 46% said that regular reporting highlighting the impact of their investments are having would motivate them to increase their sustainable investments.

The bulk of investors in the region are at ease with the prospect of embracing sustainability, with 67% of Southeast Asian investors are feeling positive about moving to an entirely sustainable portfolio, so long as the same level of risk and diversification was maintained. Globally, this was most pronounced with younger people aged between 18-37 (60%).

Indeed, 62% of Southeast Asian investors said the environmental impact of investing sustainably was the most appealing factor, ahead of 48% who cited having greater chances of higher returns and 43% who believe it’s aligned with their societal principles.

Schroders global head of sustainable investments Andy Howard said these findings have laid bare the growing expectations 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.

“At the same time, despite this greater profile for asset managers, there is still clearly more to be done to demonstrate to investors that a sustainable focus does not have to compromise returns. Indeed, we see sustainable value creation as intrinsically linked to successfully navigating social and environmental challenges.”

The study also delved into what controversies would drive people to withdraw from investments. Southeast Asian investors revealed that financial scandals (68%) and data privacy breach or cyber hacks (68%) are the most likely reasons. Some 60% of Southeast Asian investors also stated they would sell out if there were climate change catastrophes.

Investors are also increasingly expecting global action to be taken to address climate change. The study found that pressure was growing on almost all key global stakeholders – from governments, companies and even asset managers – to mitigate the impact.

More than three-quarters (77%) of investors in Southeast Asia agree that this responsibility should fall on the shoulders of governments and regulators. While 74% placed responsibility on companies for tackling climate change. However, the biggest change in sentiment over the past four years has been the growing role expected of asset managers.

About 61% of Southeast Asian investors believe investment managers and major shareholders are responsible for mitigating climate change. This is substantially higher than the global average of 46% in 2020.


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