Investors across American and Europe have been aligning their portfolios with their personal values and have been embracing the idea of "sustainable investing", an investment strategy that allows investors to "sleep well at night" knowing that their portfolios are not financing activities that they find objectionable.

Even in booming wealth centres across Asia, high-net-worth and ultra-high-net worth individuals are also increasingly seeking for investment strategies that fit with their personal values, reaching a total of US$52.92 billion at the end 2013 in Asia.

But in China, a country that has the second most number of millionaires in the world behind the United States, only contributes to a fraction of Asia's total sustainable investments, sitting at US$1.7 billion near the end of 2013, according to ASrIA 2014.

This could change though. Currently and in the last few years, Chinese investors are focused on becoming wealthy, acquiring capital for their children to use and give them a better life. But with environmental issues becoming more serious, and with water and air problems continuing to spark concerns across the public, Chinese investors do have the potential, regardless if they know it or not, in investing in a sustainable manner.

Investing sustainably

Although sustainable investment in China is at its nascent stages, there is great potential in the market say Carl Berrisford, equity analyst, UBS Chief Investment Office Wealth Management, in a conversation with The Asset.

"Right now sustainable investment is almost non-existent compared to the rest of the world. But it has great potential in China," said Berrisford.

Chinese want to ensure that their children have a healthy life, including having access to fresh water, clean air, and resources. According to Berrisford, Chinese investors' mindset is ideal for sustainable investment to prosper in China.

"Chinese investors are focused on growth and making money fast. But they do have real issues and concerns. These investors' mindsets are set on the next generation. So issues that affect the next generation will be important, and it will start off with education, and health, and there are concerns regarding environmental impact. The mindset is that they do have a longer term view," said Berrisford.

Berrisford pointed out that Chinese investors are investing in financial instruments that are sustainable. In July 2015, China's first official green bond raised US$300 million, and it was five-times oversubscribed, receiving orders of US$1.4 billion. This has set the role of green bonds in China on a strong path, as the country attempts to generate around US$1.6 trillion over five years to extricate itself from its worrisome environmental problems.

Chinese government takes lead

One of the issues that Chinese investors face in China regarding investing sustainably is their lack of options to choose from. But according to Berrisford, the government has picked up the slack and has been focusing on sustainable long-term investments.

"There is a level of sustainable investment coming from the government. They are focused on air quality, water quality. If you look at fixed asset investment by the government, and if you look at the outlay in infrastructure, the fastest growing is actually in water management and environmental infrastructure. They are spending over 3 billion renminbi a year on this," adds Berrrisford.

Recently, Wu Shunze, deputy head with Chinese Academy for Environmental Planning, notes that China's environmental protection related investment averaged approximately one trillion yuan annually in recent years, which is likely to rise to two trillion yuan annually during 2016-2020 given the government's targets of increasing efforts on air protection, water protection as well as land and soil protection.

China has been increasing its spending on environmental protection steadily, with an investment of 602.6 billion renminbi (US$97 billion) in 2011, 825.3 billion renminbi (US$134 billion) in 2012 and an estimated sum of 1 trillion renminbi (US$162 billion) in 2013.

When asked about the future of private Chinese investors focusing on investing in a more sustainable way, Berrisford says, "They like thematic investing, perhaps if there was a fund in water management, people might invest in it. There is huge potential, and they will need more education and more options, which I am seeing it is changing now. "