Over the last three months, Wendy Lim invested S$10,000 in a US-listed exchange-traded fund (ETF) focusing on clean energy and conservation. Lim, who considers environmental, social, and governance (ESG) factors in her investment, sees sustainable energy as the future. She is part of a rising trend among retail investors who prioritize ESG aspects in their investment choices.
Motivations Behind Sustainable Investments
Wendy Lim, like many others, seeks good returns with lower risks in sustainable investments. Beyond financial gains, she aims to make a positive impact by supporting causes aligned with her values. The desire to invest in companies contributing to environmental, social, and governance goals has gained traction among retail investors, with a significant portion expressing interest in sustainable investing.
ESG: A Crucial Framework
ESG factors evaluate how companies manage resources, impact the environment, and practice good governance. This framework considers social aspects such as labor practices, employment equality, and relationships with suppliers and communities. The governance dimension examines leadership diversity, business ethics, reputational issues, and exposure to bribery.
Growing Popularity of Sustainable Investing in Singapore
A UBS poll revealed that about 90% of respondents in Singapore want investments aligned with their values, whether related to social or sustainable causes. Nearly 70% expressed a heightened interest in sustainable investing compared to the pre-pandemic period. Another study by UOB indicated that 90% of Singaporeans want to learn more about sustainable investing, with 13% already making such investments.
Financial Institutions Respond to Demand
DBS reported a steady increase in investments in its sustainability-themed funds, with purchases nearly tripling from January to September. The bank plans to introduce more sustainability-themed investment products in response to growing demand. Robo-adviser Syfe noted that the “ESG and clean energy” option is the most popular among its thematic investment portfolios.
Global Momentum for Sustainable Investing
While sustainable investing is not entirely new, the global momentum has increased over the past two years, fueled by heightened awareness of climate change and sustainability issues. The United Nations officially introduced the term ESG in 2004, but the current surge in interest reflects a broader societal shift toward responsible and impactful investing.
Source: channelnewsasia.com
