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Green investments, financing gain traction in Indonesia despite lack of investor awareness
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Brokers monitor the Composite Stock Price Index (IHSG) trading in Jakarta in this file photo. (JP/Nurhayati)
T
he “green is the new black” sustainability trend has reached the financial world as investors and financial institutions are slowly turning to invest in environment, social and governance (ESG)-compliant assets in Indonesia.
Rising awareness of the mounting environmental and social problems has prompted global investors, both institutional and retail, to invest in sustainable assets that comply with ESG standards. Although this type of investment has been gaining popularity in the developed markets for the past several years, Indonesia seems slow in adopting the trend.
For BNP Paribas Asset Management Indonesia, sustainable mutual funds only accounted for 4 percent of its total assets under management as of September 2019. The fund manager currently offers three ESG-compliant mutual fund products to its clients that adhere to the sustainable and responsible investment (SRI) method in choosing assets for its portfolio.
“But we believe that these products will be more in demand among investors,” said BNP Paribas Asset Management Indonesia director Maya Kamdani in an emailed response to The Jakarta Post.
Other than emphasizing the sustainability of the investment, the products also look at the impact of the investment as the company would donate a portion of the investment to charitable foundations to help those in need.
Global sustainable investment reached $30.7 trillion in the five major markets of Europe, the United States, Japan, Canada and Australia/New Zealand. Europe continues to manage the highest proportion of 46 percent of global sustainable investing assets, followed by the United States with 39 percent and Japan with 7 percent, according to the Global Sustainable Investment Alliance (GSIA) sustainable investment review 2018.
Mutual fund data research firm Infovesta Utama head of investment research, Wawan Hendrayana, told the Post on Nov. 4 that education on ESG products was essential in building awareness among investors, especially for retail investors as most of them are usually more concerned about short-term return on their investments.
