Prudential: Asia green investment options limited despite ESG momentum

Despite rapid regulatory development of Asia’s ESG ecosystem, the insurance giant still finds a lack of investable green opportunities and available climate data in emerging markets.
Prudential: Asia green investment options limited despite ESG momentum

Prudential believes it has a distinctive role to play in the global net zero transition — particularly across emerging markets in Asia where it operates.

Although environmental, social and governance (ESG) regulations have become a priority much later in the region compared to Europe, the insurance giant is encouraged by the tremendous progress that has been made across Asia, according to Diana Guzmán, director of group ESG at Prudential Plc.

Still, the main challenge that persists is the lack of enough investable green opportunities denominated in local currencies in the region.

Prudential, however, remains optimistic.

Diana Guzmán,
Prudential plc

"The increasing momentum is not only evident in developed markets such as Hong Kong and Singapore, but also holds true for emerging markets such as Malaysia and Thailand. As a result, we are delighted to see growing ESG initiatives that are tailored to the regional contexts,” Guzmán told AsianInvestor.

“In Malaysia, for example, a Shariah-compliant voluntary carbon exchange market has been launched, followed by a Climate Change and Principle based Taxonomy (CCPT) that extends to emerging topics such as biodiversity,” she said.

Guzmán believes the progress made in Asia will both improve investors’ confidence in terms of market credibility, as well as provide guidance to corporates on how to implement ESG in their home markets.

Also read: Prudential to focus on two fronts for Asia EM decarbonisation

As highlighted in Prudential’s recent ESG report, the insurer is uniquely positioned to facilitate the ESG dialogue across regions. The firm is engaging a mixture of advocacy and blended finance in its ESG framework to facilitate a just and inclusive transition towards a low-carbon economy across Asia.

“Given our current footprint, we monitor and engage with ESG policies across Asia. Meanwhile, we maintain ongoing relationships with developed market governments, such as the UK government, to discuss the role of the private sector in supporting an inclusive transition,” said Guzmán.


Prudential’s ambition to achieve its climate targets has remained unchanged during recent turbulent market conditions. The insurer seeks to balance the need for decarbonisation with sustainable development of the local economies and is particularly mindful of the challenges in some of its major Asian markets such as India, China, and Malaysia, which remain highly reliant on coal and other fossil fuels.

Also read: Bupa, Prudential tackle Asia’s fragmented ESG landscape

One main challenge for Prudential’s endeavor is in finding investable green opportunities denominated in local currencies, said Guzmán.

“As local asset owners within many emerging markets, we are exposed to liabilities in their local currencies. Due to a limited number of established transition finance instruments within these markets, our total investment contributing to a net-zero transition remains modest, despite our strong appetite,” she said.

In addition, climate data availability and quality remain top challenges for emerging markets.

“As highlighted in our ESG report, TCFD-aligned (Task Force on Financial-Related Disclosures) reporting is notably lower across Asia and Africa. Carbon emissions data, for example, rely largely on assumptions and proxy data,” she said.

“In addition, Scope 3 emissions make up a significant share of emissions for certain sectors, but this has not been captured well, given it’s generally not mandated from companies to disclose Scope 3.”


Although the ESG ecosystem in Asia has had a later start than in Europe, the region is in the unique position of being able to observe and learn from the successes and failures of earlier-movers, and in some respects may be able to leapfrog into a best practice position according to Danielle Welsh-Rose, head of sustainability investment specialists and APAC sustainability at abrdn.

Danielle Welsh-Rose,

“We are seeing some fast-moving regulatory developments in markets like Singapore, Hong Kong, and Malaysia that are driving some of the interest in ESG.

"We are also seeing investors in developed markets looking for more Asian exposure and bringing more stringent ESG expectations with them,” Welsh-Rose told AsianInvestor.

To avoid the worst impacts of climate change, the world needs Asia to quickly transition away from fossil fuels.

Welsh-Rose agrees with Prudential’s assessment that the transition needs to happen in a way that does not leave vulnerable communities behind and will require a focus from policy-makers and investors on transitioning industries from brown to green.

Also read: Prudential, Bupa: Balancing net zero goals with EM needs

“There are a number of challenges for investors in Asia, such as having access to credible company-level data on emissions, targets, and strategy. This is a challenge globally, but especially within Asian emerging markets,” said Welsh-Rose.

“Investors also need to be able to invest in climate solutions. In terms of challenges to successfully deploying capital to invest in these solutions, challenges remain around climate policy uncertainty at the country level, and a lack of appropriate climate investment opportunities.”

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