Asia has become the motor of the global economy and it is no secret that it presents attractive opportunities for investors. However, the region is still at the beginning of its sustainable journey and its complex landscape poses unique challenges to investors, consisting as it does of 17 investable markets, each with their own cultures, languages and regulatory frameworks. Moreover, Asian companies have historically lagged their developed markets counterparts when it comes to environmental, social and governance (ESG) considerations.
Nevertheless, investors in Asia are now paying closer attention to corporate governance issues and increasingly holding companies to account for their practices. This means assessing business practices beyond the boardroom, not just box-ticking disclosures. This requires specialised skill sets and extensive bottom-up analysis.
Asia offers attractive opportunities to improve ESG standards
Source: Jefferies, Factset, 30 August 2020. Note: MSCI Indices (ex China A shares) universe with at least 3 analyst coverage.
China is pursuing sustainable growth
Though China is facing significant social challenges, sustainability has become one of its key priorities. For example, it has set the ambitious goals of hitting peak carbon emissions before 2030 and achieving carbon neutrality by 2060. Companies will play critical roles in helping the country fulfil its goals and investors must play their part.
Fidelity’s advantages in sustainable investing across Asia
At Fidelity, we integrate sustainability research into our fundamental research and security selection processes, and have developed our own proprietary ESG rating system. We use our extensive corporate access to undertake in-depth active corporate engagement, which can help bring about positive change, while increasing the companies’ long-term resilience and creating shareholder value. We also engage with regulators via public consultations, recognising the key role they play in setting overall market standards.
Fidelity International, 31 December 2020
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