PETALING JAYA: A majority of Malaysian investors (62% versus 66% in Southeast Asia and 60% globally) are more likely to believe that investing sustainably is key to driving long-term returns, according to the Schroders Global Investor Study 2022.
The sustainability-focused findings of Schroders’ flagship study, which has surveyed close to 24,000 people who invest from 33 locations globally, including Indonesia, Malaysia, Singapore and Thailand, found that more than two-thirds (65% versus 72% in Southeast Asia and 68% globally) of Malaysian investors who class themselves as having “expert/advanced” investment knowledge believe that sustainable investment is the only way to ensure profitability in the long term.
This compares with 58% of “intermediate” investors in Malaysia (versus 60% in Southeast Asia and 52% globally) and 61% of those who believe they have “beginner/rudimentary” investment knowledge (versus 62% in Southeast Asia and 43% globally).
Similarly, 67% of “expert/advanced” investors (versus 72% in Southeast Asia and globally) share the view that investing sustainably can support positive change when it comes to challenges such as climate change.
Specifically, the study found that environmental impact was the main reason people are attracted to sustainability investing (56% versus 58% in Southeast Asia and 52% globally). Financial gains came second at 49% (versus 37% in Southeast Asia and 36% globally), and societal principles ranked third in Malaysian investors’ list of priorities (41% versus 44% in Southeast Asia and 43% globally).
However, a focus on delivering financial returns unsurprisingly still remains a priority for many investors.
More than half (65% versus 63% in Southeast Asia and 56% globally) seek a fund that focuses primarily on delivering financial returns while integrating sustainability factors. That is particularly the case for people in Asia (61%) and the Americas (60%), while people in Europe were more likely to choose a fund with sustainability characteristics (51%).
The study also found that people would increasingly invest in sustainable funds if they were able to invest in line with their preferences. More than half of Malaysian investors (58% versus 63% in Southeast Asia and 57% globally) across all self-defined expertise levels said that the ability to choose investments that align with their personal sustainability preferences would encourage them to increase their allocation to sustainable investments.
In terms of investors’ specific sustainability goals, quality education was seen as the most important in Malaysia, with 20% of those surveyed (similar to 20% in Southeast Asia and globally) ranking this option first. Good health and wellbeing was also 20% (versus 17% in Southeast Asia and 12% globally), followed by no poverty (15% versus 15% in Southeast Asia and globally) and zero hunger (14% versus 13% in Southeast Asia and 14% globally).
Apart from the ability to choose investments aligned with their personal sustainability preferences, around half (56% versus 51% in Southeast Asia and 48% globally) said that more education around sustainable investing would encourage them to allocate more sustainably. The lack of clear definitions of sustainable investments was cited as one of the most significant barriers to investing sustainably by all knowledge levels.
Completing the top three, some 55% of Malaysian investors (versus 52% in Southeast Asia and 44% globally) stated that more data and evidence showing that investing sustainably delivers better returns would encourage them to increase their investments.
Schroders Singapore CEO Lily Choh said a majority of investors in Malaysia believe sustainability is crucial to delivering long-term risk-adjusted returns.
“The role that asset managers play is increasingly critical in helping investors differentiate and better understand the benefits of investing sustainably. The intrinsic link between long-term sustainable investment returns and investing in companies generating a positive impact on environmental and social causes is growing stronger each day.
“Innovations in sustainable strategies to capture opportunities in the low-carbon transition and financial education are key to driving capital into sustainable investing. With a better understanding of the products they invest in and their impact on society and the environment, it would encourage them to increase their allocation to sustainable investment.”
