Eastspring Investments, the Asian investment management arm of American financial group Prudential, is offering its Asia Sustainable Bond Strategy to Hong Kong, according to an announcement.
The bond fund has been approved to be included on the Securities and Futures Commission of Hong Kong’s list of environmental, social, and governance (ESG) funds.
Eastspring’s Asia Sustainable Bond Strategy invests in green, social, and sustainability bonds, and other debt securities issued by Asian governments, quasi-governments, corporates, or supranationals.
The $254 billion asset manager started this strategy in Singapore in December 2019, and it is currently co-managed by Rong Ren Goh and Yong Hong Tan from Eastspring’s fixed-income team.
“Interest in ESG investment solutions has been growing rapidly in this market, alongside the government’s push to make Hong Kong a regional hub for green finance. The strategy offers investors the opportunity to capture sustainable returns in the world’s fastest-growing region, and it provides a compelling solution for investors looking to diversify their Asian fixed-income portfolio,” commented Joyce Chan, general manager and head of intermediary sales in Hong Kong at Eastspring.
The firm added that the sustainable finance bonds issuance in Asia hit $95 billion during the first half of 2021, compared with $32 billion a year ago.
“The urgency to undertake effective responses to address climate concerns will see rising issuances from Asia’s energy, transportation, banking, and real estate sectors, creating numerous compelling opportunities for bond investors,” said Goh.
“With Asia’s unique mix of strong economic growth and policy support, we see strong potential for ESG outperformance as rapid wealth accumulation and rising ESG demand intersect,” he pointed out.
At the same time, the region’s diversity, social and cultural nuances, along with the lack of a standardised ESG taxonomy, disclosure, and data definition, have complicated the ESG risk assessment process. Eastspring’s ESG framework focuses on identifying the ESG risks of an issuer and its preparedness to mitigate such risks, the firm said.