Wealth manager St James’s Place Asia has released a new study entitled “Money Relationship Monitor – The Wealth Journey” looking at how 2,000 Hongkongers and Singaporeans are investing their money as well as the opportunities arising from ESG investing.

A report released this week by St James’s Place Asia (SJP Asia) finds that the wealthy in Hong Kong and Singapore are more likely to prioritise ESG and sustainability factors when investing, and direct their resources towards creating a positive impact in the world around them.

Despite there being rising interest in sustainable investing in recent years, the survey reveals that perceived barriers to entry for sustainable investing result in less appetite from those in the lower wealth categories. 

While 47 per cent of respondents in Hong Kong and Singapore say they would divest from a company that is not operating sustainably, the study finds that this is more likely as people move up the wealth ladder, with as many as 75 per cent of the wealthiest group, the financially abundant, expressing this. 

The study, entitled Money Relationship Monitor – The Wealth Journey, looks at how 2,000 Hongkongers and Singaporeans aged 25 to 64  – categorised across five different levels of wealth financial stability (ST), financial security (SE), financial flexibility (FL), financial freedom (FR) and financial Aaundance (AB) – are managing and investing their money. 

The report also examines the trends, opportunities, and challenges of environmental, social and governance (ESG) investing and how they differ across different wealth levels.

In response to rising investor demand, many wealth managers have been focusing more on ESG investing recently. French-Swiss private banking house Edmond de Rothschild has just appointed Nathalie Wallace as chief sustainability officer, based in Paris, to cater for this demand. See here. European investment house Mediolanum International Funds (MIFL) has also stepped up action to tackle climate change, with the launch of nine ESG-focused funds,  as mentioned here. The demand for ESG investments is continuing despite controversies over "greenwashing" – making investments seem "greener" than they really are, the underperformance of certain ESG funds in 2022, and political controversy about the achievability of net zero targets.
 
Playing the long game with ESG investing 
Across wealth levels in Hong Kong and Singapore, SJP Asia’s survey shows that interest in responsible investing is growing apace, with 84 per cent of those at the highest end of the wealth spectrum (AB) prioritising ESG and sustainability factors in their investments, compared with 64 per cent in the financially stable group, the survey reveals.

Almost half of all respondents (48 per cent) say their interest in sustainable investments has increased. The rise of ESG investing is even more apparent in wealthier cohorts, with 76 per cent of the AB group reporting greater enthusiasm for sustainable investing compared with 36 per cent of those who are financially stable. 

The study finds that this enthusiasm is manifest in the investment decisions of Hong Kong and Singapore’s wealthiest, with 90 per cent of the AB group underscoring the importance of investing in companies that contribute to mitigating the effects of climate change – a figure significantly higher than the average of 74 per cent.

“The findings illustrate a continued trend that investors, especially the wealthy, are paying more attention to the sustainability goals announced by companies before putting their capital in – something that we have seen over the years,” Oliver Wickham, Asia partnership director at SJP, said. 

Breaking down barriers to responsible investing
Nearly three in four Hongkongers and Singaporeans (71 per cent) feel that there needs to be better information about sustainable investing, illustrating an opportunity for wealth managers and financial advisors, especially for the less financially abundant. 

Apart from the continued momentum in responsible investing, few also believe that their financial affairs will become simpler despite the advent of AI-assisted investing and robo-advisory platforms. In fact, the survey shows that nearly nine in 10 forecast that their financial affairs will remain the same or become more complex in the next one to five years. 

“Financial advice remains a priority for most when it comes to managing one’s wealth, especially as one continues to advance [on] the wealth ladder,” Wickham said. â€śEven as AI and assisted research rise in popularity and show potential to simplify the financial advice process, there is still no replacement for personal and tailored financial advice that is the result of a trusting relationship with a professional financial advisor, who is adequately equipped to understand one’s unique financial situation and can help with mapping and achieving financial goals.”   

The findings in this survey were analysed and established through a total of 2,000 interviews conducted online in February and March 2023 in Hong Kong and Singapore. Only respondents between the ages of 25 and 69 and who held personal investments in stocks, property, shares, funds, etc. were interviewed. All respondents were from households with a minimum annual income of between S$70,000 ($52,000) and over S$250,000.