Private capital is booming in the Asia-Pacific, and so is sustainable investing. The region now leads the world in bringing these two investment strands together, with a strong emphasis on shared values between private asset owners and managers.
As the adoption of environmental, social, and governance (ESG) factors in Asia Pacific (APAC) investing gathers pace, so has demand for professionals experienced in executing these practices. Finding people who can help drive sustainability remains a challenge, but given the importance of ESG to younger investors – and potential employees – it will be increasingly vital to do so.
The growing appeal of ESG
According to the BNP Paribas ESG Global Survey 2021, about 60% of investors in APAC have been integrating ESG for less than 3 years, compared to 30% in Europe and 44% in North America.
However, that is quickly changing; ESG is becoming more mainstream. Our survey shows that in two years, 37% of investors in the region will consider ESG as central to or a necessity in their investment strategy, a twofold increase from 15% currently. There are several reasons for this uptick in ESG adoption in Asia.
First, as investors, both globally and in APAC, learn that competitive returns can be generated through sustainable investments, attracting capital will become harder without ESG adoption.
Second, young people are actively seeking investments that align with their values. Millennials, who make up almost 25% of the Asian population, are twice as likely to consider investing in companies that target social or environmental outcomes.
Additionally, Asia is seeing a top-down effect, with smaller firms following in the footsteps of larger, high-profile funds that have adopted and integrated ESG investing. Investors are also increasingly aligning with the UN’s Sustainable Development Goals (SDGs) and showing a growing appetite for sustainability-linked products like green bonds.
The war for talent
These factors point towards the rising need for individuals with ESG expertise to help firms integrate ESG principles into their strategy to meet different data management, reporting and data assessment needs.
However, identifying investment professionals with the right skillset is not simple. In some ways, it’s a Catch-22 situation: firms need experts to grow their ESG investment strategy but these experts are hard to come by, which in turn slows down its broader implementation.
A shortage of ESG experts has also driven some organisations to depend on a handful of outsourced professionals. Our survey shows that about 7% of APAC investors are likely to hire external consultants to manage their ESG strategy, compared with just 3% in the rest of the world.
“Effective ESG fund managers in Asia need to have a hybrid profile; they must have a handle on the data science, along with a robust understanding of business, investment strategy, and the region,” says Jules Bottlaender, Head of Sustainable Finance, Asia Pacific at BNP Paribas Securities Services. “It is hard to find a strong candidate, but also equally challenging to attract them to firms in early stages of ESG adoption.”
In fact, as more and more investment professionals become mindful of their employers’ commitments to sustainability, 10% of APAC investors say attracting talent was among the top three reasons for incorporating ESG factors into investment decision-making.
Still, there is cause for optimism. As ESG momentum ramps up in APAC, regional expertise in the field is also bound to grow. In the meantime, as organisations in APAC compete for top ESG talent, they will need to make themselves as attractive as possible, focusing on embedding ESG investing into their businesses.