Sustainable and socially responsible investment (SRI) is set to soar, according to Swiss private bank Sarasin, a view supported by a survey released last week by German group Siemens.
"One sea change we've seen has been the rapidly increasing interest in sustainable and socially responsible [SRI] investments, which goes across the board, including fixed-income and equities, from both institutional and private investors," says Burkhard Varnholt, chief investment officer and head of asset management at Bank Sarasin in Zurich. The firm is a strong advocate of sustainable investments.
"I have a sense that we are at a tipping point, where something that used to be a niche investment style is on the verge of becoming mainstream," he told AsianInvestor while visiting Hong Kong last week.
To illustrate his point, Varnholt says Bank Sarasin's assets under management or advisory in SRI investments now total Sfr30 billion, up ten-fold from Sfr3 billion five years ago. "That shows this is not a cyclical upswing in investment but a sea change in investor assets," he adds.
The reasons for this are two-fold, he says. One is "increasing conscience about this global economy becoming a village where capital markets are increasingly unforgiving about cutting corners".
The other driver is a growing recognition that investments that apply such principles have consistently outperformed classic equity or fixed-income benchmarks. That has been the case even more so over the past two years, both before and after crisis, adds Varnholt.
"This reconfirms the view that maybe the world is changing," he says, "and maybe the next five years will be even less forgiving to investors that don't pay sufficient attention to such principles."
Bank Sarasin doesn't break down its assets by region, but Varnholt says surveys have shown that Asia-Pacific is, "interestingly enough", the region most interested in SRI and has the highest global affinity with such assets.
He suggests this may be because Asia is quickly becoming industrialised and -- as a result -- is being confronted with the results of it, in the form of greater demand for water, energy, food and so on.
Varnholdt sees thematic investments, such as resources, water and renewables, being the most popular assets in the future.
Meanwhile, findings released by Siemens during the Asia-Pacific Economic Cooperation CEO Summit in Singapore last Wednesday come to a similar conclusion. More than half of the 270 participants polled said the economic crisis may stimulate progress towards sustainable development, with 86% anticipating an increased investment in green technologies.
Three-quarters also pointed out that the crisis will lead to new paradigms of managing both the environment and the economy.
Three-quarters of survey participants reside in Apec economies, and interviewees included experts from government, private sector, academia and non-profit organisations.
Other possible upshots of the economic crisis, according to interviewees, include the adoption of more environmentally sustainable lifestyles, the start of better cooperation among national governments to create binding international agreements, and an impetus for governments to reform fiscal policies to recognise environmental impacts.
Another opinion canvassed from respondents is that the US and China will supplant Germany as leaders in green technology over the next 10 years.
Siemens is an electronics and electrical engineering conglomerate, operating in the industry, energy and healthcare sectors.