The trend for encouraging the use of environmental, social and governance tests in investments continues.

Matthews Asia, the US-headquartered fund management firm, has signed global principles for responsible development as it commits to using environmental, social and governance (ESG) tests in its investment process.

The San Francisco-based asset manager, which focuses on Asia investments, has signed up to the the United Nations-supported Principles for Responsible Investment, an initiative launched 10 years ago.

“We see a consideration of ESG issues as being particularly relevant in Asia, where so many of the world’s sustainability challenges and potential solutions are centered,” said William Hackett, chief executive for Matthews Asia.

The firm oversaw $25.5 billion of client assets as at the end of last year.

“A growing number of our clients and employees now recognise the positive impact companies who adopt ESG practices can have both in terms of the communities they operate in and through long-term shareholder returns,” Hackett said, adding that his firm’s recent launch of the Matthews Asia ESG Strategy seeks to address this need.

Among other firms which have signed up to the global principles in recent months are Manulife Asset Management and RBC Asset Management. 

The trend for ESG-linked investing remains an area for debate, amid questions over whether this model delivers superior returns. According to a recent survey from the Morgan Stanley Institute for Sustainable Investing, investors appear to place a premium on sustainability. Nearly three quarters (72 per cent) of those surveyed by Morgan Stanley said companies with good ESG practices can achieve higher profitability and are better long-term investments. At the same time, 54 per cent believe that sustainable investing involved a financial trade-off (source: Morgan Stanley, April 2015).