Asia's Growing Commitment to Climate Investing Surpasses Europe
Asian investors prioritize climate change more than their European and North American counterparts, with 79% integrating climate policies. Key challenges include greenwashing and lack of clear reporting standards.
Regional Leadership in Climate Commitments
Asia-Pacific (APAC) investors are at the forefront of climate investing, surpassing their European and North American peers. According to a recent survey by Robeco, 79% of APAC investors have prioritized climate change in their investment policies, compared to 76% in Europe and just 35% in North America[1]. This commitment is expected to strengthen, with projections showing 87% of APAC investors prioritizing climate investing within the next two years.
Challenges and Opportunities
Despite this progress, the APAC region faces significant challenges. Greenwashing, a practice where companies falsely portray their products or policies as environmentally friendly, is a major concern, cited by 40% of surveyed investors. Additionally, the lack of suitable investment data, research, and clear reporting standards poses hurdles for investors seeking to make informed decisions[2].
Innovations in Low-Carbon Technology
Innovations in low-carbon technology are driving the APAC region’s climate commitment. Companies in the region are leading in renewable energy and energy efficiency technologies. For instance, firms developing perovskite solar cells and high-voltage electric-current lines for wind power are at the forefront of this transformation. Automakers in the region are also advancing rapidly, with significant investments in electric and hybrid vehicles, as well as hydrogen fuel-cell cars[3].
Investment Strategies and Market Trends
Investment strategies in the APAC region are evolving to support these innovations. Active equity strategies and green bonds are particularly popular, with 38% of APAC investors encouraging external equity managers to adopt climate voting policies[1]. Moreover, the integration of Scope 3 emissions measurement, which includes indirect emissions from a company’s value chain, is more prevalent in APAC than in North America, highlighting the region’s comprehensive approach to climate investing[1].
Addressing Investor Skepticism
Despite the strides being made, a growing skepticism towards ESG (Environmental, Social, and Governance) funds exists among Asian investors. A study by AXA Investment Managers revealed that the proportion of investors who expect ESG funds to outperform non-ESG funds has dropped to 41% in 2023 from 51% in 2021[3]. This skepticism is driven by a lack of clarity over ESG funds’ sustainability and declining investor awareness about these funds’ objectives.