Winners rationale

The application of ESG factors in portfolios is rapidly emerging as a mainstream staple in investment management frameworks as investors bank – not only on the hope of utilising capital to make real world impact – but on criteria that could potentially spell sustainability and generate superior long-term returns.Led by a wave of European investment managers (85% claim to apply some degree of ESG analysis, according to a 2017 RBC Global Asset Management Survey), ESG funds have grown to exceed US$360 billion, based on Bloomberg data.

In Asia, ESG investing remains a new concept, but there are underlying tailwinds supporting the investor base. Themes range from better corporate governance in Korea and Japan, to the development of environmental technology, including electric car batteries or solar and wind generators, in China and India. Above all, Asia is not immune to a demographic shift, namely a millennial population that is more focused on making positive impact rather than returns alone.

Private banks in the region have already taken an active approach, ramping up their offerings, ranging from funds and discretionary mandates to green bonds to ESG-compliant research and selection of underlying securities.

Asset managers have responded by bolstering such propositions, developing ESG capabilities, educating clients about benefits, and ultimately, distributing viable investment products.

This year, BNP Paribas Asset Management emerged as a standout in the fast-growing market of ESG funds.

Backed by a groupwide and global effort to support responsible investing, the French asset manager has provided distributors with an array of products beyond applying ESG overlays to traditional long-only funds. Its product range includes investments relating to water, food and climate, and applies a framework that even exceeds stringent UN principles.

Although it is still early days, BNP Paribas Asset Management already re-affirmed itself as a strong contender in the responsible investment space through its commitment to delivering sustainable long-term performance and integrating ESG criteria to its overall approach. Put simply, the firm is already making inroads into distribution with Asian wealth managers, kickstarting its efforts with robust performance and promising demand.

Evidence of its understanding and care for the domestic flavour du jour, the asset manager has tweaked its strategies to include share classes that are denominated in local currencies or provide income pay-out – a critical differentiator for a region with an insatiable hunger for yield.

BNP Paribas Asset Management is Asian Private Banker’s 2018 Best Fund Provider – ESG Investing.