The Philippines joint venture of a Belgian insurer is on the hunt for more sustainable investments, a senior executive told AsianInvestor.
We seek to have more investments that are highly rated in ESG and/or with a high impact sustainability agenda,” said Rowena Empalmado, chief operating officer and head of the investment team at EastWest Ageas Insurance.
“Currently, we employ the investment strategy of integration and ethical or negative exclusion.”
EastWest Ageas is a joint venture between the Philippines' EastWest Bank and Belgian insurer Ageas.
EastWest Ageas Insurance
Belgian insurer Ageas operates in nine countries in Asia, including China, Malaysia, Thailand, India, the Philippines and Vietnam via joint ventures.
EastWest Ageas Insurance uses third-party rating agencies, supplemented by internal assessment of publicly available sustainability disclosures to assess investments.
“Moreover, we exclude companies from our investible universe based on some ethical considerations,” said Empalmado, although she did not elaborate what those considerations are.
Empalmado previously told AsianInvestor that she believes Asian equities are likely to outperform and that the insurer will likely add allocations.
The insurer, unlike other asset owners, is not focusing on alternative asset classes for now as it is still growing its overall investment portfolio.
Still, Empalmado believes infrastructure and real estate could perform well this year as “the decline in the risk-free rate supports a revaluation.”
Empalmado’s hope of adding sustainable investments is part of a broader regional trend among asset owners as they increasingly incorporate ESG and/or sustainability principles in their investment process.
Sun Life Philippines, the local insurance arm of Canadian giant Sun Life Financial, told AsianInvestor earlier this year that it is also putting the final touches on a new ESG framework.
The insurer excludes tobacco and coal companies from its investment portfolio but it plans to adopt an ESG integration approach, Michael Gerard D. Enriquez, chief investment officer and president of Sun Life Investment Management and Trust Corp, told AsianInvestor in February.
Outside of insurance, Thailand’s $13 billion Government Pension Fund has said it incorporates ESG factors into its investing framework and considers ESG as part of the overall assessment of external fund managers.
In addition, to align with the United Nations Sustainable Development Goals, GPF has already set SDG11 (sustainable cities and communities), SDG12 (responsible consumption and production), and SDG13 (climate action) as its main goals.
“GPF has holdings in asset classes that can contribute directly to the progress of these goals. These SDGs also have a common theme of the bio-circular-green (BCG) economy which is relatable to many companies in its equity portfolio,” deputy secretary general Man Juttijudata, told AsianInvestor recently.
Indonesian pension fund BPJS Ketenagakerjaan also told AsianInvestor recently that ESG is a hot topic in the country.
Director of Investment Development Edwin Ridwan noted that while environmental factors have not yet been formalised in the investment process of the pension fund, governance is very much assessed.
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TWO KEY DRIVERS
The shift to sustainable investing is driven by two main drivers: a regulatory push and increasing demand for sustainable investing.
While regulations vary across countries, there is an overall trend from voluntary compliance to mandatory disclosure. Several jurisdictions across Asia-Pacific are proposing local taxonomies and disclosure requirements.
In the Association of Southeast Asian Nations, or ASEAN, the ASEAN Taxonomy for Sustainable Finance Version 2 has been published, offering a multi-tiered approach that allows for varying levels of adoption, noted a Morningstar Q2 report on sustainable fund flows.
Countries such as Singapore, Hong Kong and Malaysia have released TCFD (Task Force on Climate Related Disclosures)-aligned regulations, while Taiwan and Japan have issued sustainability reporting and stewardship codes.
“China has also progressed by setting in place Guidelines on Environmental Information Disclosure for Financial Institutions, the EUChina Common Ground Taxonomy, and there are ongoing consultations in the Securities and Exchange Board of India regarding ESG regulation," a 2023 outlook by Amundi Institute released in April said.