As sustainable investing gains traction worldwide, Singaporean investors are also beginning to take notice. However, despite growing interest, there are significant barriers that need to be addressed to foster greater uptake of sustainable investments in the region.
According to a recent survey conducted by Standard Chartered Bank, a notable 37 per cent of respondents anticipate allocating more than 15 per cent of their investment portfolios to sustainable assets within the next two to three years. This marks a significant increase from the current 24 per cent of investors who have already embraced sustainable investment practices.
However, many investors in Singapore have yet to fully explore the potential of directing their investment dollars towards sustainable opportunities. But, Chen Yong Xiong, founder of Yongjing Family Office (YFO), contributes a unique perspective to the discussion on sustainable investments.
Through YFO’s interest in tech startups, dementia causes, charity work, and commitment to sustainability, they aim to play a constructive role in Singapore’s investment landscape. Thus, this untapped potential represents a significant opportunity for both investors and the broader society to drive positive change while also potentially reaping financial rewards.
Understanding sustainable investment
Have you ever thought about where your money goes when you invest it? Sustainable investment is all about making choices with your money that not only aim to make a profit but also care about important things like the environment, society, and how companies are managed. Mr. Xiong stated, “Invest in businesses that do good things for the world, not just make money”.
Investing sustainably involves making choices with your money that go beyond mere financial gain. It’s about supporting companies and projects that prioritise important issues like protecting the environment, promoting social equality, and ensuring good governance practices.
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When investors engage in sustainable investment, they look beyond short-term returns. They consider factors such as how a company treats its employees, whether it’s taking steps to reduce its carbon footprint, and how transparent and ethical its management practices are. These considerations are often referred to as environmental, social, and governance (ESG) criteria.
Why does sustainable investment matter
Sustainable investment holds significant importance for Singapore as it reflects our commitment to building a greener, fairer, and more resilient society. When we choose to invest sustainably, we’re not just seeking financial returns; we’re actively supporting businesses and projects that address Singapore’s unique challenges, such as climate change, social inequality, and urban sustainability.
By directing our investments towards companies that prioritise environmental conservation and ethical governance, the society is contributing to the city-state’s efforts to create a more sustainable future for all Singaporeans.
Benefits of sustainable investing
- Long-term returns: Sustainable investments have the potential to deliver competitive financial returns over the long run, as they often align with resilient business models and emerging market trends.
- Risk management: By integrating Environmental, Social, and Governance (ESG) factors into investment decisions, investors can better identify and manage risks associated with issues such as climate change, supply chain disruptions, and regulatory changes. In this situation, family offices can better assess and mitigate investment risks.
- Social and environmental impact: Sustainable investments can address significant societal issues while promoting environmental conservation and ethical governance. For instance, YFO may invest in companies developing healthcare solutions for dementia, contributing to both societal well-being and environmental sustainability. This dual impact underscores the potential of sustainable investing to create positive change.
- Innovation and opportunity: Given the boom in technology over the recent year, investing in the technology sector also reflects recognition of the innovation potential within sustainable practices. Sustainable technologies not only address environmental and social challenges but also present lucrative investment opportunities. By supporting promising tech startups in Singapore, such family offices also contribute to fostering innovation and addressing pressing global issues.
Conclusion
In conclusion, investing in a better future through sustainable investment practices is not just a trend but a crucial strategy for shaping a more equitable society. As highlighted by Mr. Xiong, sustainable investing goes beyond mere profit-making; it’s about making choices that align with our values and contribute to positive change.
By incorporating environmental, social, and governance (ESG) considerations into investment decisions, investors can potentially achieve competitive financial returns while also mitigating risks and driving positive societal and environmental impacts.
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