With the majority of the world’s population residing in Asia, the region is expected to account for more than half of global economic growth by 2023. Asia is on track to meet all 17 UN (Sustainable Development Goals (SDG), and Abrdn says that sustainable investing in Asia will be key to deciding the future of the planet.

“We see four tailwinds in Asia that we believe will drive investment returns: demand; disruption; digital; and direction. We call them the 4Ds,” says writes David Smith, Senior Investment Director for Asian Equities at Abrdn. However, there is a funding gap for meeting SDGs and that makes Asia an interesting opportunity for investors as the private sector tries to fill this gap.

The investment management firm talks about the 4Ds in detail. For demand, Abrdn cites the Intergovernmental Panel on Climate Change (IPCC) estimate of $130 tn investment for decarbonization by 2050.

Next up is disruption, which Abrdn attributes to disruptive technology which can make businesses more efficient. In the decade up to 2020, the region accounted for 52% of global growth in technology revenues and Asian firms filled around 87% of global technology patents.

Under digital, Abrdn talks about the different trends in e-commerce, 5G, gaming and social media. The rising use of digital services is creating an investment opportunity in the region.

Lastly, Abrdn sees the need for government policies for a clear strategy for tackling climate change. The investment management firm takes the example of US President Joe Biden’s Inflation Reduction Act which has earmarked $400 bn to reduce greenhouse gas emissions in the US.

“ESG investing is just getting started in Asia. The region accounts for 40% of global equity market capitalisation but just 4% of assets in ESG funds globally. Again, Asia’s growth potential is clear,” writes Smith. Abdrn says that there are several opportunities in Asia for sustainable investing with a long-term view.

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