Monetary Mindfulness: An Introduction to Impact Investing
Impact funds backed by rock stars, sustainable rubber plantations in Indonesia and plant-based food are just some of the investment opportunities available to high-net-worth individuals and families in Asia. While sustainable investment has been slower to catch on in this region than in the US and Europe, more and more private investors are understanding that generating healthy financial returns and making a positive impact on the world can go together.
“Impact investing is gaining wider interest, with more clients convinced of the importance of generating a measurable and positive social and/or environmental impact alongside financial return from their investments,” says Kanol Pal, senior adviser for responsible investments, Asia, at BNP Paribas Wealth Management.
“The performance discussion is one we have around every single discussion we have about sustainability,” says Mario Knoepfel, head of sustainable investing advisory for Asia-Pacific at UBS Wealth Management.
Same Or Better Returns
“It’s one of the misconceptions that many clients have, that sustainability means sacrificing returns. Today there is just so much more evidence that sustainable investing is not about sacrificing returns but actually getting the same or even better returns than traditional markets, which are not looking at sustainability overall.”
“Maybe investors are not sure that sustainable investment brings attractive investment returns because they worry that the ESG (environmental, social, governance) investment selection criteria miss out on some of the best investment opportunities in the market,” says Fan Cheuk-wan, head of investment strategy and advisory, HSBC Private Banking.
“Empirical evidence has already provided extensive statistics and market data that has proved the positive value of ESG investing in helping long-term strategic investors to generate sustainable investment returns.”
Many sustainable investments available today are linked to the achievement of the UN’s sustainable development goals (SDGs)—the set of 17 global challenges, such as the provision of affordable and clean energy, clean water and sanitation, tackling climate change and creating educational opportunities, that the UN aims to overcome by 2030.
But if sustainable investing is becoming more mainstream in Hong Kong and Mainland China, what are the investment trends or products that high-net-worth individuals and families are putting their money into?
(See also: Millennial Money: The Future of Finance)