PI Partnership – Manulife Investment Management


Murray Collis is deputy CIO, fixed income Asia ex-Japan, at Manulife Investment Management


SUSTAINABILITY IN ASIA: PROGRESS IN THE FACE OF SCEPTICISM


When it comes to Asia, it is not unusual for investor enthusiasm to give way to some form of cynicism when the discus- sion moves from growth to sustainability. There seems to be a dominant perception that the region has chosen to prioritise economic progress over other competing goals, often at the expense of the environ- ment and sustainability-related causes. While there is no shortage of statistics to support that perspective, they do not nec- essarily paint an accurate picture of what is happening on the ground. In our view, an important, if quiet, sus- tainability evolution is taking place in Asia—one that can lead to compelling opportunities in fixed income. The move- ment is largely driven by the region’s pol- icymakers who, on current evidence, un- derstand the urgency, specifically in regard to issues pertaining to the environ- ment. However, ongoing efforts to address sustainability issues are likely to be dwarfed by the rate at which the conti- nent is growing, which also implies that any positive progress will invariably be subsumed by growing demand for even more resources. That said, it is important for investors to recognise that important foundations have been laid in the past few years.


The region’s central banks, for instance, are extremely supportive of developing green financing and could well be engag- ing in an unspoken race to the top, each


vying to be a key player in green financ- ing. Asia’s stock exchanges are not far behind—several exchanges have made it mandatory for listed firms to provide environmental, social and governance (ESG) information to investors, while oth- ers made clear their preference for firms to do so. It is also fair to say that the region’s prominence in the global renew- able energy space is not borne out of coin- cidence: The introduction of appropriate legislation and investment policies has given the continent’s renewable energy industry the support it needed to grow.


Top 10 investors in clean energy capacity during 2019


1 China


2 United States 3 Japan 4 India


5 United Kingdom 6 Taiwan 7 Spain 8 Germany


9 Netherlands 10 Brazil


Source: Bloomberg New Energy Finance, January 2020


The growth in Asia’s sustainable debt market, which includes green, social and sustainability bonds, has been remarka- ble. China and South Korea were among the first in Asia to tap into the green bond market, but in the past year, Southeast Asia has also hopped on the bandwagon – green bond issuance by ASEAN nations nearly doubled to $7.8bn (£5.7bn) in 2019¹. Understandably, the Covid-19 out- break has prompted concerns regarding investor appetite; however, the surge in interest in sustainable investing in recent months suggests ESG bond issuance should continue to rise as investor focus on sustainability issues has sharpened in light of the pandemic. Economic growth often comes at a cost, particularly from a


sustainability and


environmental perspective. In this aspect, Asia’s experience is no different from its developed peers. It is clear to us that sus- tainability is a key priority for policymak- ers in the region, creating opportunities for fixed-income investors to participate in efforts to deliver lasting solutions.


It is clear to us that sustain- ability is a key priority for policymakers in the region, creating opportunities for fixed-income investors to participate in efforts to deliver lasting solutions.


That said, the geographic specificity of these challenges and the absence of a uni- versal taxonomy continue to hamper pro- gress. As such, an intimate knowledge of Asia and a nuanced understanding of the sustainability issues confronting the region are key to investment success. In our view, the sustainability movement in Asia has moved past the inflection point and could hold promise for those who are able to see the bigger picture. The full paper from Manulife Investment Management outlines the work that has been undertaken by the region’s policy- makers to address sustainability issues and examines how the Covid-19 outbreak may have influenced developments. It also identifies the key challenges that con- tinue to hamper progress and highlights issues that investors should consider before deciding to allocate to Asia’s grow- ing sustainable investments market.


The full paper can be read at: www.manulifeim.com/institutional/global/en/ viewpoints/fixed-income


1) “Asean’s green bond issuances nearly doubles to US$7.8bil,” New Straits Times, 23 June 2020.


Issued and approved by Manulife Investment Management (Europe) Limited. Registered in England No.02831891. Regis- tered Office: One London Wall, London, EC2Y 5EA. Authorised and regulated by the Financial Conduct Authority


Issue 100 | February 2021 | portfolio institutional | 29


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48