Fund houses that excelled in ESG in Asia, explained

AsianInvestor’s industry-leading Asset Management Awards are widely tracked by asset managers and asset service providers with a presence in Asia Pacific.

While the awards process has evolved through the years, the awards remain focused on picking the brightest and best stars in the region's asset management industry.

The awards selection procedure is simple but rigorous. This year, we also developed more specific criteria to guide applicants for greater transparency and clarity.

Our judging panel, comprising independent industry veterans and top executives from asset owners across the region, assessed all qualified entries and took lead in providing valuable insights and guidance on shortlisting the best candidates.

The final entries were also assessed by the editorial team to eventually decide on the ultimate winners.

In the second installment, we explain the rationale behind the judges’ choices for the ESG Excellence Awards.

Please note: the Award for Best Environmental Investment Strategy Adviser will be announced on May 18. Two shortlisted candidates were announced. A write-up will follow after the announcement.

Once again, a huge thank you to all the judges who participated in the asset management awards.

Best Social Investment Strategy Adviser
BNP Paribas Asset Management

This submission was a clear winner in this category due to the sheer size and scale of the commitment of BNP Paribas Asset Management (BNPP AM) to its social investment strategy.

With more than €21.1 billion (US$23.1 billion) in sustainable thematic strategies focusing on environmental, climate and social theme, BNPP AM is one of the leaders in sustainable thematic investing.

In terms of competitive advantage, the judges believed the fund house has set aside a good sum of money for sustainable investment strategies.

In particular, they were impressed by its ability to class funds as Article 9 under sustainable finance disclosure regulations (SFDR). 

Under SFDR, Article 8 products promote environmental or social characteristics in the pursuit of other financial objectives. 

Article 9 products, however, seek to make a positive impact on society or the environment through sustainable investment and have a non-financial objective at the core of their offering.

In May 2022, BNPP AM launched a Sustainable Asian Cities strategy, the first sustainable fixed income strategy with an Asia focus in the market classified as SFDR Article 9.

The strategy is designed to target opportunities for enhancing urban mobility, incorporating low-carbon elements, improving basic infrastructure to help cities operate and thrive, while improving their resilience to extreme weather events.

“Classing some of these funds as Article 9 is actually quite difficult: most of the other entries come across as only having achieved article 8,” judges said.

Best Impact Investment Adviser 
New Forests

From sun bears to honey production and Indonesian rubber plantations to the Mekong timber industry, New Forest Impact entered a submission that impressed judges with the scope of its commitment to climate and local communities.

New Forests is a global investment manager of nature-based real assets and natural capital strategies with A$10.6 billion in assets under management across more than 1.2 million hectares.

The objective? To demonstrate that integrating commercial forestry investments with activities such as ecosystem restoration, reforestation, and community forestry will lead to better returns, long-term sustainability outcomes, and operational resilience.

Judges were impressed by the application of innovative finance structures to these tangible and pressing environmental issues.

In March last year, New Forests announced the first close of its Tropical Asia Forest Fund 2 (TAFF2) which raised an initial US$130m out of an expected $300m to help transform the forestry sector in Southeast Asia.

In order to gain even deeper impact, New Forests collaborated with the David and Lucile Packard Foundation to develop an innovative blended finance structure.

This blended finance structure enables TAFF2 to integrate investment in impact activities focused on climate action, community engagement and livelihoods, and biodiversity conservation into TAFF2’s plantation forestry portfolio.

Its work with Hutan Ketapang Industri (HKI) in Indonesia – which operates a large-scale rubber plantation located in West Kalimantan, Indonesia – showcases how the finance industry can make profit and do good.

From social programs for local communities to biodiversity initiatives designed to assist habitats for sun bears and orangutans, judges said New Forest Impact is showing the way forward for forestry, finance and ecology.

Best Impact Investment Adviser [finalist] 
Robeco

Best Impact Investment Adviser was a hard-fought category within our awards and Robeco came away with a more than honourable mention from judges who were impressed by the comprehensive range of its customised impact solutions.

In terms of competitive advantage, the overall size of its investment in ESG is US$1.3 billion, which is pretty substantial.

The fund house also launched three ESG funds in 2022.

It also partnered with AIA Singapore to launch the AIA Sustainable Multi-Thematic Fund – a bespoke sustainable thematic fund in Singapore for investment-linked products (ILPs).

The sustainability fund aims to outperform the MSCI World Index (Net Return) by pursuing investable themes that benefit from sustainability megatrends and which actively address social and environmental challenges, taking into account their real-world positive impact.

One interesting aspect which caught the attention of judges was its commitment to combatting what it called ‘impact washing’.

“As the popularity of impact investing grows, so too will the allure of making false claims in order to capture clients and assets,” Robeco said in its submission. “Unsurprisingly, ‘impact washing’ is a critical concern among not only impact investors but also market regulators.”

The fund house has therefore developed an impact measurement methodology that aims to provide a concise set of metrics and measurement techniques that demonstrate the positive effects its sustainable thematic and impact strategies are generating for society and the environment.