RISING IMPORTANCE OF
ESG IN ASIA-PACIFIC

SUMMARY

TABLE OF CONTENTS

Financial institutions can play a significant role inassisting the transition by providing financing tosustainable industries, and helping investors in shifting
capital toward investments that provide measurable
ESG benefits. Asia-Pacific (APAC) is demonstratinga strong commitment to keep up with the growing
emphasis on sustainability and ESG investing.

Article 1

Increasingly, more asset owners and fund managers in
APAC believe ESG plays a central, integral, or necessaryrole today. The level of adoption in the region is
expected to rise as awareness among investors andpolicymakers grows. In several APAC countries, thelikelihood of ESG being incorporated as a requirement
in investment strategies is increasing.
While the future of ESG adoption in the region
looks promising, there is still a long road ahead as
challenges around reliable ESG data continue toimpede wider integration. Moving towards a moresustainable investment landscape, the upcoming years
will be a turning point in setting a global roadmap, andthe role that financial institutions play would be more
important than ever before.

When it comes to sustainable private capital, APAC leads the world ................................................................................................................................................ 3
APAC holds a strong interest in integrating ESG into private market assets due to its asset’ nature of granting a higher power for the investors to define the ESG profile.

Article 2
Why APAC investors are on the hunt for ESG talent ............................................................................................................................................................................... 4
As ESG is thriving in APAC, investors are hunting for talents that are able to generat competitive returns and align values with the young investors with ESG adoption.

Article 3
How ESG regulations are challenging APAC asset managers ................................................................................................................................................................ 5
In the era of tightening ESG regulation, APAC asset managers failed to leverage ESG analytics tools will be difficult to compete.

Article 4
The challenge and opportunity in APAC investors’ net-zero push ....................................................................................................................................................... 7
With the pressing needs to achieve net-zero mission in APAC, institutional investors who managed to become the first-mover will enjoy extra investment opportunity.

Article 5
Why SDGs are increasingly important for APAC investors .................................................................................................................................................................... 9
APAC investors are integrating SDGs framework into their investments, however, there is still a room for development.

Article 6
Why APAC fund managers must prove their values, as well as their value .....................................................................................................................................10
Fund managers in APAC can capture regional investors’ growing interest in ESG values by providing solutions with high data accessibility.

Article 7
How sound data and analytics can help boost ESG’s credibility ....................................................................................................................................................... 11
Importance for investors to have a scalable ESG data model.

WHEN IT COMES TO SUSTAINABLE PRIVATECAPITAL, APAC LEADS THE WORLD
Private capital is booming in the Asia-Pacific,
and so is sustainable investing. The region
now leads the world in bringing these two
investment strands together, with a strongemphasis on shared values between private
asset owners and managers.

INCREASING FOCUS FOR APAC INVESTORS ON
INCORPORATING ESG INTO PRIVATE ASSETS

The BNP Paribas ESG Global Survey 2021 shows that 43% of Asia-Pacific(APAC) investors incorporate ESG (environmental, social and governancegoals) into private market assets, compared to 38% of respondents globally.
The approach varies by country. Investors in China tend to focus on
incorporating ESG into private equity and debt, as do those in Singapore,
whereas in Australia the focus is on real estate investments
Why are ESG and private capital converging in APAC? Improving the ESG
profile of an asset is likely to increase its future value, given that more
and more global capital is chasing ESG opportunities. And private markets
grant APAC’s investors greater power to define the ESG profile of the assets
they are acquiring, because a small number of investors participate in asingle deal, so each holds a proportionately larger ownership stake than doinvestors in listed companies.

TABLE OFCONTENTSALIGNED ON ALIGNMENT
The survey also shows that APAC investors place significant importance onalignment between the ESG agendas of asset owners and managers.
“ESG considerations form an integral part of our Alternatives’ team’s
investment process. When we look at investments in private equity funds
and co-investments, our due diligence includes an assessment of ESG
performance, potential risks and scope for improvement. Where applicable,
we will seek to engage and influence the private equity managers to
improve underlying businesses for long-term sustainability” says Michael
Woolley, director, sustainability at Eastspring Investments.

Discussing the way ESG in alternatives is handled by the Australiansuperannuation fund, UniSuper Governance and Sustainability Manager
Sybil Dixon says:“We seek to have good alignment with our private market managers; weare quite explicit in how we expect them to manage ESG risks. We have asmall number of private market mandates that provide us a focused range
of opportunities, rather than allocating to a large number of funds.”
At a time of increasing urgency around climate action, private capital isgoing to play a vital role in supporting the race to net zero. APAC’s earlylead may well be a function of this strong belief in making sure that asset
owners and managers are on the same ESG page.

ARTICLE HIGHLIGHTS
Private capital growing fast in APAC:
43% of APAC investors incorporate ESG into private market assets

Investors in China and Singapore focus on incorporating ESG
into private equity and debt among the APAC region

Rising Importance of ESG in Asia-Pacific3WHY APAC INVESTORS ARE ON
THE HUNT FOR ESG TALENTAs the adoption of environmental, social,and governance (ESG) factors in Asia Pacific(APAC) investing gathers pace, so has
demand for professionals experienced in
executing these practices. Finding people
who can help drive sustainability remains achallenge, but given the importance of ESG toyounger investors – and potential employees– it will be increasingly vital to do so.

THE GROWING APPEAL OF ESG

According to the BNP Paribas ESG Global Survey 2021, about 60% ofinvestors in APAC have been integrating ESG for less than 3 years,
compared to 30% in Europe and 44% in North America.
However, that is quickly changing; ESG is becoming more mainstream. Our
survey shows that in two years, 37% of investors in the region will consider
ESG as central to or a necessity in their investment strategy, a twofold
increase from 15% currently. There are several reasons for this uptick in
ESG adoption in Asia.
First, as investors, both globally and in APAC, learn that competitive returns
can be generated through sustainable investments, attracting capital will
become harder without ESG adoption.
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Second, young people are actively seeking investments that align with
their values. Millennials, who make up almost 25% of the Asian population,
are twice as likely to consider investing in companies that target social orenvironmental outcomes.1
Additionally, Asia is seeing a top-down effect, with smaller firms following in
the footsteps of larger, high-profile funds that have adopted and integrated
ESG investing. Investors are also increasingly aligning with the UN’s
Sustainable Development Goals (SDGs) and showing a growing appetite forsustainability-linked products like green bonds.

“Effective ESG fund managers in Asia need to have a hybrid profile;they must have a handle on the data science, along with a robust
understanding of business, investment strategy, and the region,” says
Jules Bottlaender, Head of Sustainable Finance, Asia Pacific at BNP Paribas
Securities Services. “It is hard to find a strong candidate, but also equallychallenging to attract them to firms in early stages of ESG adoption.”

THE WAR FOR TALENT

In fact, as more and more investment professionals become mindful of
their employers’ commitments to sustainability, 10% of APAC investors say
attracting talent was among the top three reasons for incorporating ESG
factors into investment decision‑making.

These factors point towards the rising need for individuals with ESG
expertise to help firms integrate ESG principles into their strategy to meetdifferent data management, reporting and data assessment needs.

Still, there is cause for optimism. As ESG momentum ramps up in APAC, regional
expertise in the field is also bound to grow. In the meantime, as organisationsin APAC compete for top ESG talent, they will need to make themselves as
attractive as possible, focusing on embedding ESG investing into their businesses.

However, identifying investment professionals with the right skillset is not
simple. In some ways, it’s a Catch-22 situation: firms need experts to growtheir ESG investment strategy but these experts are hard to come by, which
in turn slows down its broader implementation.
A shortage of ESG experts has also driven some organisations to depend ona handful of outsourced professionals. Our survey shows that about 7% of
APAC investors are likely to hire external consultants to manage their ESG
strategy, compared with just 3% in the rest of the world.

ESSENTIAL QUALIFICATIONS FOR ASIA FUND MANAGERS
1 https://www.morganstanley.com/ideas/sustainable-socially-responsible-investingmillennials-drive-growth

ARTICLE HIGHLIGHTS

Key factors for the growing appeal of ESG in APAC:• Earning competitive returns from sustainable investing• Asian Millennials tend to do investment that target social andenvironmental outcomes• APAC investors prefer sustainability-linked products
Key factors for Asia ESG fund managers to be hired:• Ability to handle on data science• Robust understanding of business, investment strategy, and the region
Rising Importance of ESG in Asia-Pacific4HOW ESG REGULATIONS ARE
CHALLENGING APAC ASSET MANAGERS
Investors in Asia Pacific (APAC) place a high priority
on asset managers’ research, reporting anddisclosure capabilities, as regulators in the region are
insisting on clearer, more consistent, and transparent
standards around environmental, social, andgovernance (ESG) reporting.
The challenge is therefore on asset managers toensure not only that they are in compliance with new
regulations, but also that they are using the full suiteof analytics tools to leverage the ESG data now attheir disposal – catering to the growing expectationin the region among asset owners for clear
information on the impact of their investments.

NEW RULES FOR A NEW WORLDStreamlined regulations are key to a wider integration of ESG norms into
investment processes around the world, according to the BNP Paribas’
ESG Global Survey 2021. Nearly two-thirds of global investors expect
ESG regulations to accelerate and deepen the adoption of ESG strategies,
according to the survey.
TABLE OFCONTENTSCURRENT TREND OF ESG REGULATIONS IN APAC
Authorities across APAC are playing a leading role. Hong Kong’s Securities andFutures Commission in January 2022 introduced enhanced disclosure requirements
for ESG funds,1 while the Monetary Authority of Singapore is moving towards amore detailed and prescriptive approach to ESG issues, including issuing guidelines
for portfolio construction and risk management.2
Meanwhile, New Zealand’s Financial Sector (Climate-related Disclosuresand Other Matters) Amendment Bill, introduced in 2021, requires large
financial market participants to disclose information about climatechange‑related risks and opportunities.3 And the Australian Prudential
Regulation Authority’s Superannuation Data Transformation Programme
updated reporting standards in 2021, including practices related to climatechange financial risk management.4
Furthermore, exchanges in Malaysia, Thailand and Vietnam have made ESG
reporting a listing rule for all companies.5 The Association of Southeast
Asian Nations (ASEAN) has also set up the ASEAN Taxonomy of Sustainable
Finance to promote the adoption of green finance and encouragesustainable development.6

MORE DEMANDED OF ASSET MANAGERS

In this new environment, enhanced ESG reporting, and disclosure
requirements will help institutional investors better structure theirinvestments, while asset managers will be compelled to leverage ESG
analytics tools, accurately explain their portfolio performance, and deliver
better value to their investors.
Indeed, those who do not do so will struggle to compete. The BNP Paribas
study showed 47% of APAC investors highly value a manager’s ESG researchcapabilities when selecting an investment manager for ESG-factored

investments, compared to a global average of 35%. Some 55%, meanwhile,
say the alignment between the manager and its ESG values and mission
is crucial (compared to 47% globally), and some 40% say the same of the
managers’ ESG reporting and disclosure capabilities.

KEY GOAL TO SUIT ON NEW REGULATIONSThe emphasis on research, reporting and disclosure underscores a key
goal of the suite of new regulations: to encourage genuine and efficientsustainable policies that facilitate investors’ attempts to align theirinvestments to their ESG commitments.
As Michael Woolley, Director, Sustainability at Singapore-based Eastspring
Investments, noted, “Regulation has a big part to play, and harmonisation ofregulation is very important as well. Otherwise, there could be confusion orconflict between different regulatory systems. It will be difficult to have an‘apples to apples’ comparison until you have data consistency, and that is asignificant challenge.”
1 https://apps.sfc.hk/edistributionWeb/gateway/EN/circular/products/productauthorization/doc?refNo=21EC27
2 https://www.mas.gov.sg/regulation/guidelines/guidelines-on-environmental-riskmanagement-for-asset-managers
3 https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/
BILL_109905/financial-sector-climate-related-disclosures-and-other4 https://www.apra.gov.au/news-and-publications/apra-determines-superannuationdata-transformation-reporting-standards
5 https://sseinitiative.org/stock-exchange/
6 https://asean.org/wp-content/uploads/2021/11/ASEAN-Taxonomy.pdf
Rising Importance of ESG in Asia-Pacific

5HOW ESG REGULATIONS ARE
CHALLENGING APAC ASSET MANAGERS

APAC CATCHING UP ON ESG REGULATIONSARTICLE HIGHLIGHTS

The good news for APAC is that while Europe is leading in adopting ESG
regulations, the region is quickly catching up in terms of recognising therole regulations play in addressing ESG-related issues, and designing andimplementing a coordinated regulatory approach, according to a report byauditing firm EY. 1

Importance for asset managers to show abilities on ESG
reporting and requirements“As APAC regulators boost their ESG guidelines, we are pleased
to see investors welcoming and leveraging them to create better
value for themselves,” said Josephine Maiorana, Head of Regulatory
Watch & Market Advocacy, APAC at BNP Paribas Securities Services.
“Regulations need to be looked at as catalysts, not obstructions, toclimate-aligned investments.”

47% of APAC investors highly value an asset
manager’s ESG research capabilities

55% of respondents expressed the significancein aligning the ESG values and mission withasset manager

1 https://assets.ey.com/content/dam/ey-sites/ey-com/en_gl/topics/banking-andcapital-markets/ey-climate-change-and-sustainability-global-regulators-step-up-thepace.pdf?download
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Rising Importance of ESG in Asia-Pacific6THE CHALLENGE AND OPPORTUNITY IN
APAC INVESTORS’ NET-ZERO PUSH
With more governments, companies andfinancial institutions committing to reducing
carbon emissions, institutional investors haverealised quickly they cannot afford to be left
behind. And while market participants acrossthe world are taking note, investors in Asia
Pacific (APAC) are emerging as pioneers among
their global peers, according to BNP Paribas’
ESG Global Survey 2021.
Two overarching factors are behind thistrend. First, with the region’s vast coastlines,
several small island states and low-lying
territories, countries in APAC are at significant
risk from global warming and rising sea levels.
Second, as pressure from at-risk communities,
local media and companies mounts, moregovernments in the region are taking theirclimate commitments seriously and driving
policy changes,1 leading to top-down action.
1 https://reliefweb.int/report/world/undps-climate-promise-action-asia-and-pacific
TABLE OFCONTENTS

In this context, APAC’s asset managers are
now required to meet the region’s demand fornet-zero-aligned portfolios and investment
strategies. Given the scale of the investment
required in the region to achieve net-zero, thepotential rewards for those who can meet thischallenge are considerable.

APAC INVESTORS EMERGE AS NET ZERO LEADERS

The BNP Paribas survey studied investor action to support the goal of a net‑zero
economy by 2050. The survey identified three types of investors: Net Zero
Leaders, who are already implementing their commitment to reaching a net-zerotarget, Net Zero Explorers, who have committed to a net-zero goal but are yet
to start implementing it, and Net Zero Observers, who have not committed to a
net-zero target yet.
Across the global sample in the survey, 37% emerged as Leaders, 36% as
Explorers and 27% as Observers. Investors in APAC, though, are considerably
more committed to reaching net-zero goals – 44% of the respondents in APAC
were Leaders, while 41% were Explorers. By contrast, only 24% of North American
investors fell into the Net Zero Leader category.

EXPLORING MORE ASSET CLASSES AND STRATEGIESAsset managers in APAC will have to cater to growing demands among
these Net Zero Leaders for suitable investments, an appetite that extends
across asset classes and strategies. For the majority of survey respondents(88%), equities remain the primary asset class used in their climate‑related
considerations, according to the BNP Paribas study.
Even so, some 52% of APAC investors said they invest in thematic Exchange
Traded Funds (ETFs), compared to 37% globally, and 16% in ETF broad
market indices to reach their net‑zero targets. Only about 8% of APAC
investors choose corporate credit for these investments, the survey showed.
APAC investors are also employing more sophisticated strategies and tools
to manage climate change risks, according to the Asia Investor Group on
Climate Change (AIGCC). 2
Half the APAC investors surveyed in the BNP Paribas study said they include
climate risk mitigation measures, such as portfolio temperature scoring, to helpalign their investments with net‑zero targets. In comparison, 48% of global
investors currently practice this.
2 https://www.aigcc.net/new-industry-survey-finds-large-appetite-for-net-zeroinvestment-across-asia/
Rising Importance of ESG in Asia-Pacific7THE CHALLENGE AND OPPORTUNITY IN
APAC INVESTORS’ NET-ZERO PUSHA HUGE OPPORTUNITY
Even as several APAC institutional investors have committed to lowering
their carbon footprint, more need to join the fray to meet the Paris
Agreement goal of limiting the rise in global temperatures to 1.5°C of
pre‑industrialisation levels. Indeed, the AIGCC estimates that the investment
opportunity for Asia’s energy supply to achieve net-zero is between USD 26
trillion to USD 37 trillion cumulatively from 2020 to 2050. 1

NET ZERO LEADER IN THE BUSINESS WORLD

The scale of the investment needed in the region makes the role Net Zero
Leaders play even more critical. Some recognise the scale of the challenge
and the opportunity. Australian superannuation fund UniSuper, for instance,is among the institutional investors in the region issuing and implementing
Investor Climate Action Plans. 2
Sybil Dixon, Senior Investment Analyst at the fund, noted: “We put our carbon
targets in place last year and set a net-zero carbon emissions target for our
portfolio by 2050. This is our first push into being more mindful of our impact
and measuring progress against those targets... The shift to sort of being morecognisant of the impact our investments are having is something I find quite
powerful.” Organisations like UniSuper are key to driving a mindset shift in
the asset management space and can lead by example.
1 https://www.aigcc.net/wp-content/uploads/2021/03/March-2021_-Asias-Net-ZeroEnergy-Investment-Potential-English.pdf“It is encouraging to see APAC investors moving in the right direction,”
said Jules Bottlaender, Head of Sustainable Finance, APAC at BNP Paribas
Securities Services. We look forward to seeing these numbers grow,not just in Asia, but across the world. The investment community must
understand the critical role it plays in propelling change. Those asset
owners and managers who haven’t yet thought about net‑zero can learn
a lot from APAC’s Net Zero leaders. ”

ARTICLE HIGHLIGHTS

Three types of APAC investors to support net-zero economy goal by 2050:
44% of Net Zero Leaders, who already
implementing commitment

41% of Net Zero Explorers, who committed but
yet to start implementing it

15% of Net Zero Observers, who have notyet committed

2 https://theinvestoragenda.org/casestudies/

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Rising Importance of ESG in Asia-Pacific8WHY SDGS ARE INCREASINGLYIMPORTANT FOR APAC INVESTORSAs sustainability considerations grow inimportance for institutional investors
worldwide, BNP Paribas has found that those in
the Asia Pacific (APAC) region are increasingly
leveraging the universal framework to aligntheir investments / taking a holistic approach toaligning with the universal framework.
According to BNP Paribas’ ESG Global Survey
2021, 35% of institutional investor respondents in
APAC said they try to align their investments withall of the UN’s 17 Sustainable Development Goals(SDGs). By comparison, the figure globally is 32%.

5 AREAS OF SDGS IN THE 5 APAC MARKETSThe numbers come from our questions to institutional investors on theirattitudes to SDGs that cover five areas: climate change and sustainability;
human rights and social issues; health, well-being and quality of life; work,
growth and responsible consumption; and biodiversity and life on Earth.
In the five APAC markets we assessed – China, Hong Kong, Japan, Singapore, andAustralia – institutional investor respondents appeared to be most focused on thegroup of SDGs that relate to climate and sustainability: 85% align their investments
factoring these into account, only slightly below the global average of 89%.

TABLE OFCONTENTSAPAC institutional investors lag the world in the other four SDG groupings,
though – and significantly in three of those. While 44% say they aligntheir investments with the SDGs related to work, growth, and responsible
consumption (just behind the global figure of 46%), only 38% consider SDGs
on health, well-being and quality of life compared with 53% globally.
And while one-third say they do so for SDGs related to human rights andsocial issues (globally, 56% do), just 8% of APAC institutional investors wesurveyed factor in SDGs on biodiversity and life on Earth; that is far behind
the global figure of 37%.

FOR SUSTAINABLE INVESTING, ASSET CLASSES MATTER
Also of interest is our finding that regional investors who factor
environmental, social and governance (ESG) considerations into theirstrategies are increasingly keen to seek out the right asset class to buy into.
This chimes with a paper published by the Principles of Responsible
Investment (PRI), a UN-supported network of investors, which notes thatthe role investors play in shaping SDG outcomes hinges on the asset
classes they invest in, the markets they operate in, and the size andduration of the investment. By way of example, the ownership shares andmedium-to-long-term horizon in private equity and infrastructure projects
give investors greater scope to shape outcomes.1
When it comes to aligning investments and sustainability, APAC institutional
investors are more focused on certain alternative assets. Take private equity anddebt: 43% say they use this asset class to integrate ESG, compared with 38%
globally, while 29% use thematic ETFs versus 22% globally. Equities, on the other
hand, are favoured by 69% of respondents globally, but by just 58% of those in APAC.
Additionally, 35% of institutional investors in APAC are choosing to align only theirimpact and thematic strategies to relevant SDGs, compared with 34% globally.
1 https://www.unpri.org/download?ac=10795“It is heartening to see regional investors care more and more about
the long-term impact of their investments,” says Caleb Wong, Head of
Alternatives for Asia-Pacific region at BNP Paribas Securities Services.
“Asset managers in APAC are well positioned to help them enter the
hard-to-navigate ESG space for alternatives and accelerate investments
into private equity, venture capital, infrastructure or pension funds.”

APAC STILL HAS A LONG WAY TO GO FOR ESG

Encouragingly, 41% of APAC institutional investors surveyed report to be also
signatories of the PRI, which plays a pivotal role in helping the world meet
the SDGs. This is only slightly lower than the global figure of 44%.
That said, the survey shows there is plenty of room for improvement in APAC.
While we saw earlier that 35% of respondents try to align their investmentswith the SDGs, we also found just 14% manage to comply with the SDGs –well short of the global figure of 24%.
If nothing else, the results show that the substantial gap between ambition andattainment, while narrowing, is still there. In short, although institutional investors in
APAC are taking crucial steps on the road to sustainable investing, there is still much to do.

ARTICLE HIGHLIGHTS

SDGs are becoming highly significant to APAC investors:
85% of investors mostly focused on climate change
and sustainability among the SDGs
Private equity and debt are the most common
asset classes used by investors to integrate ESG
Rising Importance of ESG in Asia-Pacific9WHY APAC FUND MANAGERS MUST PROVE
THEIR VALUES, AS WELL AS THEIR VALUE
Investors in Asia Pacific (APAC) are on thelookout for the right asset managers to help
them build the best environmental, social,and governance (ESG) compliant portfolio as
they deepen their commitment to sustainable
investing. For fund managers in this rapidly
evolving field, proving that they share clients’values has become all the more crucial tomaintaining competitiveness.
More than half of APAC investors (55%) believethat when selecting an investment manager forsustainable investing, the manager’s ESG values
and mission should align with their own. This
compares to 47% of investors globally, according
to the BNP Paribas ESG Global Survey 2021.
A major reason behind this is that investors
who are relatively new to ESG‑investing find it
reassuring to have a manager whose interests
are the same as theirs. And according to oursurvey, 60% of regional investors said they are
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new to ESG integration – meaning the onus isincreasingly on fund managers to prove that
their values align with potential new clients ifthey want to win their business.

FROM SCREENING TO INTEGRATION TO IMPACT

Several other factors dictate the need for alignment of interests when investors
look for a fund manager. One is the rapidly evolving landscape of ESG investingin Asia: regional investors are moving beyond the negative screening method –identifying and staying away from companies that score poorly on ESG factors– towards ESG integration, which involves actively incorporating sustainability
information into investment decisions, and finally onto making positive ESG
contributions through thematic and impact investing.
It’s important for asset managers to recognise that the demand forsustainable investing in the region is growing at the grass-roots level, rather
than being driven by regulatory requirements. Our survey findings revealed
that APAC investors are less motivated by regulatory, or disclosure demands
when it comes to incorporating ESG into their decision-making, and more
inclined to integrate sustainability into their overall investment approach.
Only 8% of APAC investors rank regulatory or disclosure demands in their top
three reasons for using ESG, compared with 10% of global investors.

ROBUST RESEARCH CAN MEET DEMAND FORRELIABLE ESG DATA

In a region like Asia with several emerging markets, the need for accurate
data is acute. Accordingly, APAC investors deeply value research capabilities:
nearly half the investors in the region view research capabilities asimportant, compared with 35% of investors globally.

Reliable ESG data is something all investors want. Low-quality ESG data,
including a lack of historical information, is an issue in various markets,
including China, according to a report by the CFA Institute and PRI. The dearthof comparable and historical ESG data in Singapore, likewise, remains the top
barrier to incorporating ESG factors into equity investments in the city-state.1
Data could therefore be a crucial point of differentiation for asset managers
in the region. Our survey shows APAC investors currently tend to turn toother suppliers for ESG data and research, with only 16% saying they would
source risk monitoring and analytics from an asset manager. And only 35%
of APAC investors would turn to an asset manager for ESG reporting at thecompany, portfolio, or fund level, compared with 39% globally.
“Top-notch research capabilities set any fund manager apart, but especially in
Asia where there is a burning need for reliable data,” says Nadim Jouhid, Headof Investment Solutions, Asia Pacific at BNP Paribas Securities Services. “Thegrowing appetite for ESG investing in Asia is a welcome shift, but this glaring gap
in accessing the right data could easily deter otherwise keen participants. Assetmanagers that fill this gap stand to become a one-stop-shop for investors.”

ARTICLE HIGHLIGHTS

55% of APAC investors highlight the importance of
selecting managers who are in line with their ESG
values and mission
Asset managers can be a one-stop-shop for APAC
investors to fill the gap in data accessibility
1 https://www.unpri.org/download?ac=6459
Rising Importance of ESG in Asia-Pacific

10HOW SOUND DATA AND ANALYTICS CANHELP BOOST ESG’S CREDIBILITY
Appetite for ESG solutions is growing, withmore ESG products every day. But investors
are still looking for tools to verify corporate
and sovereign ESG claims.
This generates debates and questions aroundsustainable investing. What counts as valid
ESG data? How can ESG claims be assessed
across asset classes and business types? Whatis the true picture of ESG business impacts
right through extended supply chains?
In the absence of data that is verifiable,consistent and comparable, investors needaccess to tools and platforms that enable
them to easily access relevant data frommultiple sources and integrate this into theirdecision-making processes.
TABLE OFCONTENTSBUY OR BUILD FOR ESG ANALYTIC CAPACITY?
And that means that for many investors and the institutions that serve
them the data challenge comes down to a simple question: whether tobuild ESG analytic capacity, or buy it? The selfbuild option can be attractive
in terms of maintaining ownership of insights and supporting data, but it
calls for extensive human and data resources that might be better directed
elsewhere. The buy-in option is likely to be simpler, but it is costly and it
generates counterparty risk.
The ‘buy or build’ question is a classic corporate dilemma – but we believe
it may be the wrong question here. Most if not all of the data that investors
need is accessible: what is lacking is integration and analytic power. Thereis a strong case for investors to move to a platform solution, such as ours
which unifies multiple ESG data sources on a mix-and-match model, thatwill preserve the upside of both ‘build’ and ‘buy’ but eliminate the downsidesof cost and risk.

THE MINDSET HAS CHANGED

We know from the BNP Paribas ESG Global Survey 2021 that there is astrong need for a richer and broader ESG data solution. This latest iterationof our survey shows that for banks, investors and financial traders, ESG has
moved firmly into the mainstream, and the need for data that is credible,
detailed and transparent is widely recognised.
For example, in our 2019 survey, not a single respondent expected that 75
per cent or more of any portfolio would incorporate ESG by 2021. Yet in thisyear’s survey, 22 per cent of investors said their portfolios are now at thislevel, with 34 per cent expecting portfolios to be more than 75 per centintegrated by 2023.

This upward trend is supported by external data: by late 2021 the Net
Zero Asset Managers Initiative, which supports a goal of net zero by 2050
or sooner, had attracted 220 signatories accounting for more than USD
57 trillion of assets under management. That is more than half the global
managed asset pool.
Our survey also highlighted that there is much still to be done. A significant
portion of respondents still incorporate ESG into less than half of their portfolio,
and common challenges around data continue to impede wider integration.
Rising Importance of ESG in Asia-Pacific11

HOW SOUND DATA AND ANALYTICS CANHELP BOOST ESG’S CREDIBILITY
THE MARKET HAS CHANGED
Despite this mainstreaming of ESG, there remains little in the way ofstandardised frameworks that allow investors to make robust comparisonsof ESG performance across assets, industries and geographies. Many
critical disclosures – especially corporate ones – are discretionary andoften unsupported by rigorous data, and while ESG rating frameworks forequities are developing and the IFRS Foundation has recently announced
a continuing initiative to create new reporting prototypes , ESG-linked
private and public sector bonds are still a very small fraction of securities in
issuance and the market is fragmented.
So just as ESG investing has gained traction, the gap between ambition andverifiable compliance has widened. Regulations are not widely understood, andreliable data on which to base decisions is scarce. In our latest survey, 59 percent of respondents in Europe said that data – or the lack of it – remains thebiggest barrier to integrating ESG into their investment processes.
To drive these changes home, they need a scalable ESG data modelthat can support their operations.

TIME FOR SOLUTIONSThe BNP Paribas ESG Global Survey 2021 shows that investors are moving
decisively from learning about ESG investing to putting it into effect. They
have typically identified their base-level compliance requirements for the
EU’s Sustainable Finance Disclosure Regulation (SFDR) and have conductedcompliance risk assessments. Moreover, they have begun to move towards
TABLE OFCONTENTS

making ESG an operational investment model, integrating ESG targets into
their investment strategies, decisions and marketing.
But to drive these changes home, they need a scalable ESG data model thatcan support their operations. They need to ingest and analyse data across ahuge range of subjects, in many formats, using hundreds or even thousandsof data points, and make it serve their ESG strategies.

MANAOS FROM BNP PARIBAS SECURITIES SERVICES
This is what BNP Paribas Securities Services’ Manaos data platform offers.
Manaos, which has won multiple awards for innovation, stands out fromexisting data solutions by providing a single point of access to a universeof third-party data providers, selected by the user, with all data feeds
integrated into a single interface. All the data can be analysed in the
background according to parameters set by the user. Manaos works acrossasset classes, geographies and regulatory frameworks, whatever ESG
methodologies are used.
This multiple-source, data-market approach is effectively an evolving
ecosystem of applications and providers, not a preconfigured tool.
It creates a customisable data model, offering multiple advantages including
price transparency. Users avoid having to invest time, money and IT resourcesin their own ESG data infrastructure, and don’t have to become dependent on
limited but costly outsourced solutions. Manaos creates a single platform sourceof reliable information available to investment, risk, marketing and regulatory
teams who today generally rely on their own, often incompatible, databases.

This is a data solution engineered for change. Few aspects of investment
are evolving as rapidly as the ESG arena, so the Manaos data market model
is designed to be inherently flexible and adaptable. We believe this is thebest solution to the challenge of sifting through incomplete and inconsistent
disclosure and across multi-source, multi-format data streams to build thefullest picture possible of ESG performance and compliance.
Our latest survey results say it loud and clear: this is what investors know
they are missing, a data gathering platform that will support transformative
sustainable investing ambitions.

ARTICLE HIGHLIGHTS

Investors expecting ESG portfolios to be more than
75% integrated by 2023

There is an urgent need for investors to have ascalable ESG data model

Rising Importance of ESG in Asia-Pacific

12FOR ADDITIONAL INFORMATION, PLEASE CONTACT
Nadim Jouhid
nadim.jouhid@asia.bnpparibas.com

Jules Bottlaenderjules.bottlaender@asia.bnpparibas.com

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