AIA Invests $200 Million in Impact Funds to Boost Sustainable Investing in Asia
Hong Kong-based insurer AIA recently announced its plans to invest $200 million in impact funds, a move seen as a reflection of the growing demand from Asian investors for strategies that merge the potential of financial returns with social and environmental objectives. This marks the first allocation of its kind from AIA. The company plans to direct the funds to the United Nations Sustainable Development Goals, which require between $5 to $7 trillion in annual funding to achieve. This investment by AIA illustrates how quickly Asian investors are adopting impactful strategies and addresses the lag in sustainable investing in the region.
More Asian Investors Eyeing Impactful Strategies
Although Asian investors have been slower in committing to impact funds compared to their European counterparts, there has been a surge in interest in impactful strategies. Asian clients now account for close to 30% of LeapFrog Investments’ investor base, up from just under 5% three years ago. Sovereign wealth funds, family offices, and individuals who have inherited significant wealth are among the key players from the region. In Asia, where social and environmental needs are pressing, tangible effects of climate change are felt more acutely, spurring sustainable investing.
Climate Change and Sustainability Considerations are Driving Asian Business
“The strategies of many family businesses across Asia are increasingly driven by climate change and sustainability considerations. So there’s often a link that’s driving sustainability in the operating business that connects to impactful strategies in the family investment portfolio,” said Damian Payiatakis, head of sustainable investing at private bank Barclays. As Asian countries experience the damaging impacts of climate change faster than Europe or the US, the push for sustainable and impactful investing is more prevalent. Furthermore, Asia is a rapidly developing market that is quickly adopting sustainable investments. These factors have made impact funds attractive to Asian investors in recent years.
AIA and LeapFrog Establish Strategic Partnership
In addition to investing $200 million into impact funds, AIA and LeapFrog Investments announced that they will form a new strategic partnership. The companies will work together to develop products and services in their shared areas of interest, specifically in financial services, healthcare, and climate solutions. Additionally, companies backed by LeapFrog employ almost 230,000 people and provide services to over 451 million customers, more than 5% of the world’s population. This marks the third-largest mandate win for LeapFrog.
An Opportunity to Improve Asia’s Impact Investing Landscape
While Asia’s impact investing landscape has made strides, there is still significant room for growth. It is vital to continue to develop larger and more diversified impact investing options that can provide Asian investors with access to opportunities within their regions. In conclusion, AIA’s investment in impact funds marks a significant development towards boosting sustainable investing in Asia, and it presents an opportunity for more investors to join this impact investing trend.
Summary:
AIA recently announced its plans to invest $200 million in impact funds, a move seen as reflecting the growing demand from Asian investors for strategies that merge the potential of financial returns with social and environmental objectives. This marks the first allocation of its kind from AIA. The company plans to direct the funds to the United Nations Sustainable Development Goals, which require between $5 to $7 trillion in annual funding to achieve. In addition to investing in impact funds, AIA and LeapFrog Investments will form a new strategic partnership that will see the companies work together to develop products and services in their shared areas of interest, specifically, financial services, healthcare, and climate solutions.
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Hong Kong-based insurer AIA plans to invest $200 million in impact funds, its first allocation of its kind, in a sign of growing demand from Asian investors for strategies that combine the prospect of financial returns with social or environmental goals.
of the AIA the allocation to funds managed by LeapFrog Investments, a specialist impact fund manager, is one of the largest portfolio investments seeking to achieve social or environmental goals such as those of the United Nations Sustainable Development Goals. According to the United Nations, between $5 and $7 trillion in annual funding will be needed to achieve these goals.
While Asian investors have been slower than their European counterparts to commit to investing in impact funds, AIA’s allocation highlights how quickly they invested money in the sector.
“Asian clients now make up nearly 30% of our investor base, up from less than 5% three years ago. This is a significant increase as Asia is now almost as important as a source of finance as Europe or the US,” said Andy Kuper, LeapFrog’s CEO.
Asian interest comes particularly from sovereign wealth funds, family offices and individuals who have inherited significant wealth, he added.
Damian Payiatakis, head of sustainable investing at private bank Barclays, said that while about a third of Asian investors had not yet committed, nearly a quarter had embraced impactful strategies with “even more enthusiasm than other regions, such as Europe “.
The damaging impacts of climate change are being seen faster in many Asian countries than in the United States or Europe, encouraging Asian investors to accelerate their response to rising global temperatures, Kuper added.
“Asia is a region where there are significant social and environmental needs. The tangible effects of climate change are more notable. It is also a region of rapidly developing markets and is rapidly adopting sustainable investing,” said Payiatakis.
He added that wealth was often more recent in Asia and often still tied to operations.
“The strategies of many family businesses across Asia are increasingly driven by climate change and sustainability considerations. So there’s often a link that’s driving sustainability in the operating business that connects to impactful strategies in the family investment portfolio.”
AIA and LeapFrog also agreed to establish a new strategic partnership that will see the companies work together to develop products and services in their shared areas of interest in financial services, healthcare and climate solutions.
LeapFrog-backed companies employ nearly 230,000 people and provide services to 451 million customers, more than 5 percent of the world’s population.
The partnership with AIA marks the third-largest mandate win for LeapFrog, which secured a $500 million commitment in 2021 from Singapore’s state-backed investment firm Temasek, and a $350 million commitment in 2016 from the US insurer Prudential Financial, which has now grown to more than $500 million.
https://www.ft.com/content/b5dc6f0e-9484-4ebc-b027-e80cc1c9c712
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