KUALA LUMPUR (Feb 22): Bursa Malaysia said on Tuesday (Feb 22) that local institutions had placed emphasis on the importance of environmental, social and corporate governance (ESG)-compliant investments.
According to the regulator, Malaysia’s key institutional investment managers and asset owners — such as the Employers Provident Fund (EPF), Khazanah Nasional Bhd and Retirement Fund (Incorporated) (KWAP) — had participated in and signed the United Nations Principles for Responsible Investment in 2019.
“These institutions have incorporated the ESG mandate into their funds. The EPF is also expected to announce a sector sustainability policy framework as guidance for its future investments that will comply with ESG practices,” Bursa added.
Citing IHS Markit’s filings up to Feb 7, 2022, the regulator said the local ESG-mandated funds had a total holding value of US$118 billion (about RM494.01 billion) in stocks with good ESG ratings.
It said the filings also showed that the fund houses ranked the highest in terms of the total holding value of stocks with good ESG ratings and accounted for 92% of the total holding value of the stocks.
With the change in investment fundamentals within the industry, Bursa noted that large-scale investment banks are also pivoting their strategies in tandem with the rise of sustainability consciousness.
For instance, in December last year, Maybank Investment Banking Group announced that it would prioritise ESG and help its clients to identify green opportunities.
“ESG investing is one of the fastest-growing trends in the investment community over the past few years. ESG is slowly becoming a key consideration for investors. Asset owners such as pension funds are increasingly demanding sustainable investing strategies from their asset managers,” Bursa said.
Quoting again IHS Markit’s fillings up to Feb 7, the regulator said there were 235 ESG-mandated funds globally that had invested in Bursa as an exchange with a total holding value of US$143.5 billion (about RM600.76 billion).
44% of the funds (excluding Malaysia) were from North America, followed by Europe at 27%, Asia at 26% and the Middle East at 3%.