Asian assets tend to have lower ESG ratings than their Western counterparts, reflecting how many nations in the region are in the early stages of economic development and living standards.

Singapore-based DBS wants more than half of the private banking assets it manages to be in “sustainable” forms by 2023.

The bank said it will also “widen and deepen clients’ access to its ecosystem of social enterprises in the region to fund, support and develop these enterprises.” The initiatives are part of DBS Private Bank’s “three-pronged” strategy – drive ESG investing, advocate responsible business practices, and create social impact. 

DBS Private Bank defines “sustainable” as those rated BBB and above with reference to the MSCI ESG Leaders Index.

Asian assets tend to have lower ESG ratings than their Western counterparts, reflecting how many nations in the region are in the early stages of economic development and living standards. According to MSCI, the proportion of laggard companies (B and CCC rating) in Asia stands at 13.5 per cent, compared with 5.5 per cent in the West.

“Sustainable investments have become increasingly important in value-adding investment portfolios in the long run. However, their pace of growth is being compromised as there is still no clear definition for sustainable investments today,” Joseph Poon, group head of DBS Private Bank, said. “There is also no single established industry benchmark to rate ESG. We decided to take the lead in challenging this status quo, and were among the first in Asia to integrate MSCI ESG ratings into our product suite. By taking this step, we are not only availing greater transparency of our offerings, but are also holding ourselves accountable to our pledge to boost our share of sustainable investments.”

The bank’s statement is an example of how “sustainability” – such as a desire to withdraw from C02 emitting sectors – has become an almost relentless trend in the world’s investment sector. So much so, in fact, that it has prompted concerns about “greenwashing” – dressing up conventional investments in more appealing garb.

DBS Private Bank said it will expand its product suite to include new sustainable investment solutions. So far in 2021, the bank wants to onboard more than 10 products, comprising a range of exchange-traded funds, mutual funds and private equity investments. This includes a Global Environment Fund which will soon be launched in Q1, and will grant customers diversified exposure in a range of decarbonisation themes including renewable energy, electrification and resource efficiency.