Asia family office commitment to ESG investing tested by virus

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[SINGAPORE] As markets tumbled this year, Mary Ann Tsao faced a tough choice. Her fourth-generation family office in Singapore had adopted sustainable investing principles, but the coronavirus was trashing the global economy. Relatives suggested a return to the old ways. Read more at The Business Times.

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Debates like the Tsaos are having are taking place over the virtual dinner tables of many tycoon families and could help shape the future of ESG investment, which exceeds US$30 trillion globally. While sustainable investing has been gaining traction, Covid-19 forced many families to make stark choices: funnel money into operating businesses to prevent collapse, revert to tried and true investments or stay the green course.

In Asia"you've got 2,000 families with more than US$500 million transitioning from one generation to the next in the next 10 years," he said."It'll create a fundamental shift in the way they invest the future legacies and investments on behalf of those families." Not everything comes with consensus. Ms Aswani had some concerns when Tolaram ramped up its production of palm oil - an industry long criticised for its environmental and labour conditions - so she spoke with the company to ensure it was run with best practices. Ultimately, she said, it was better to produce in a responsible way than buy it from questionable sources.

Rich investors are taking note. Mario Knoepfel, head of sustainable and impact investing advisory for the Asia-Pacific at UBS Group, said the bank's 100 per cent sustainable portfolio assets in the region more than tripled to US$1.5 billion in July, from US$405 million in January 2019. The number of Asia-Pacific private banking and wealth management clients engaged in the portfolio rose by 50 per cent in the first seven months of the year.

"This is a journey we've only just begun," she said, adding that the pandemic had acted as a beacon for the space."It's highlighted a fragility in the financial system but also highlighted fragility in society." The jury is also out on whether ESG stocks were true havens during the Covid crash, or if some funds just got lucky. By excluding fossil fuel and gambling stocks, many embraced technology and healthcare by default - two sectors that have done well. Researchers led by Elizabeth Demers at the University of Waterloo in Canada said ESG was negatively associated with returns as the markets bounced back in the second quarter.

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