As the socially responsible investing (SRI) space continues its steady climb over the next few years, a new report suggests that the place we should be looking to for the steepest growth is Asia.
The report, “Responsible Investment in Asia,” by the London-based business publisher Campden Media and the Hong Kong-based family foundation the River Star Foundation, points to a newfound focus on sustainability in both the public and private sectors in Asia as the catalyst behind the explosive growth in SRI-type investment opportunities in that region. According to HSBC, the governments of China and South Korea committed 40 percent and 80 percent, respectively, of their economic stimulus funds to green initiatives and low-carbon projects, and Ernst & Young reports that private-sector climate-related investment in China has increased 30 fold since 2004.
The result of so much fertilization in these various SRI-friendly sectors is a new preponderance of businesses that have sprung up to populate them – at a rate that outstrips regions with more established SRI industries. The report says that 70 percent of initial public offerings in the clean technology sector over the past two years have been in Asia, and that more than a third of the companies on the Dow Jones Sustainable Investment Index are based in the Asia-Pacific region. It’s a trajectory that points to a fairly dramatic concentration of SRI investment opportunities in Asia.
However, the SRI asset management industry in the region, still in its infancy, has yet to catch up: Of the $5 trillion in SRI assets under management worldwide, Asia controls less than 10 percent, according to the report. This gap between SRI investment opportunities and SRI assets under management in Asia points to an untapped audience for SRI investment, and the report predicts we’ll soon see that audience enter the fray. The world’s collective SRI investments are expected to grow by about 25 percent per year, putting the market as $25 trillion by 2015. The report’s main finding? “Asia will drive much of this growth – and become central to the responsible investment universe.”
