Sustainability continues to see strong demand from investors despite the difficult markets and challenges that faced ESG investing in 2023, proof of resilience for ESG investment strategies.

Although there was a bit of a retrench in the industry with net inflows for Asia ex-Japan sustainable funds falling significantly to US$3.3 billion in 2023 from US$7.2 billion in 2022, ESG continues to be a huge component in terms of asset allocation and RFPs (request for proposals) for investors.

In terms of performance, the leading Asia-focused ESG funds underperformed against their benchmarks but as a whole ESG integrated funds continued to receive inflows. Sadly, though, the industry faced substantial redemptions as well as reports of asset owners leaving climate action initiatives.

Sustainable funds globally attracted new net inflows of just US$59 billion in 2023, a significant drop from US$166 billion in the previous year, according to Morningstar.

On the bright side, new sustainable investment strategies have come into focus in response to conditions in specific markets such as Japan.

It is in this context that we at The Asset announce the winners of the ESG Asset Management Company of the Year and ESG Fund Manager of the Year Awards for 2024.

ESG Fund Manager of the Year - Japan

Masayuki Teraguchi, along with his team, known as the investment technology fund management department, at Nikko Asset Management, is recognized as ESG Fund Manager of the Year for Japan for their “Japanese Equity Human Capital Empowerment Strategy”.

This strategy looks at the efficiency of investment in human capital as one of the key concepts, making it stand out from other investment strategies which focus on the “social” element of ESG investing. Other “social” investment strategies focus on one particular angle such as diversity and inclusion, women empowerment, etc.

The strategy is particularly relevant and timely as Japan is facing demographic challenges from a declining population, making human capital management increasingly essential. The strategy highly evaluates and actively invests in companies with effective human capital management and management discipline and seeks to help investee companies improve productivity and invest more in people to achieve a positive social and economic impact as well as higher equity returns.

The “Japanese Equity Human Capital Empowerment Strategy”, which references the TOPIX and uses a quantitative model, outperformed its reference index during the review period.

Fidelity International: ESG Asset Management Company of the Year

Fidelity International’s ESG funds performed impressively despite the challenging market conditions. The firm experienced positive net flows across its sustainable fund range and posted a 10% growth in assets under management in the region. Fidelity also has the strongest ESG team in the region with five senior members of the team in Hong Kong and four in Singapore, as well as ESG team members covering Australia, China, and Japan. It also continued to expand the range of sustainable funds it offers to clients.

Robeco: ESG Asset Management Company of the Year, Institutional

As a leader in sustainable investing, Robeco continued to expand its Open Access Initiative (OAI), which provides the public with ESG data that allow them to keep up with emerging trends and showcases the firm’s leadership in sustainability investing. In 2023, Robeco added SDG country scores on top of the ESG scores for issuers that are already part of the OAI. Robeco continues to be well-recognized by independent observers on ESG based on its voting actions as well as the actions of its investment team and other capabilities. Its sustainability funds outperformed despite the challenging market conditions.

BNP Paribas: ESG Asset Management Company of the Year, Highly Commended

In 2023, BNP Paribas Asset Management (BNPP AM) finalized the update of its Global Sustainability Strategy, which lays out its sustainability roadmap and objectives for 2023 to 2025, focusing on sustainability in emerging markets as a key medium-term goal. BNPP AM has also significantly expanded its ESG scoring coverage to over 13,000 issuers globally, including 5,000 issuers in Asia-Pacific and more than 1,100 in China, providing it with strong coverage of key indices.

China Asset Management: ESG Asset Management Company of the Year, China

Based on the United Nations’ Principles for Responsible Investment (UNPRI), China Asset Management (China AMC) has developed a six-step ESG integration process. This includes setting sustainable investment objectives, fundamental ESG analysis, ESG portfolio management, ESG risk management, active engagement with listed companies, and regular reporting. Based on this, the asset manager has provided a series of active funds and ETFs with an ESG focus. During the past few years, China AMC has engaged with more than 70 mainland China-listed companies, helping to improve the ESG performance and reporting standards. In 2023, the firm rolled out an in-house automated proxy voting system based on their voting principles.

Ping An Asset Management: ESG Asset Management Company of the Year, China – Highly Commended

Ping An Asset Management has integrated the concept of responsible investment into the company's investment research and decision-making process. Ping An mainly practices ESG investment from two dimensions: considering ESG factors from a research perspective to assist investment decisions and strategies, and providing positive feedback from the investment side to promote the sustainable development of enterprises.

Cathay Securities Investment Trust: ESG Asset Management Company of the Year, Taiwan

As one of the leading asset management companies in Taiwan, Cathay Securities Investment Trust has been enhancing its ESG investing capabilities. Supported by an advanced investment screening methodology and an in-house ESG rating system, Cathay has been rolling out ESG funds and gaining market traction. The Cathay MSCI Taiwan ESG Sustainability High Dividend Yield ETF, for example, has gathered market momentum, offering a tool for Taiwanese investors focused on long-term investments to realize ESG goals and secure solid returns.

Editors’ Triple Star

Sustainable Investing Open Access Initiative

Robeco broadened its Sustainable Investing Open Access Initiative (OAI) to share its extensive SDG Framework with clients and third parties as it seeks to promote and encourage research, data, and information by offering free insights into individual company SDG scores. Launched in 2022, this is an important step in making SDG scores and methodology open for clients and academics to facilitate standard setting and thought leadership in the industry. As of March 2024, OAI has over a thousand users, including over a hundred academics.

LGT Capital Partners' ESG commitment

ESG is embedded into the due diligence process, which LGT has developed to align with the UNPRI. LGT is also a member of the Net Zero Asset Managers initiative, Climate Action 100+, Institutional Investors Group on Climate Change, ESG Data Convergence Initiative, Global Impact Investor Network, and European Sustainable Investment Forum, showcasing their ESG commitment.

CICC Carbon Futures ETF

Launched by CICC HK Asset Management, the Carbon Futures ETF is the first of its kind in Greater China, allowing investors in China and Asia to access the carbon market.

For the full list of awardees, please click here.

To join the in-person annual celebratory dinner on June 14 2024 in Hong Kong, please contact [email protected].