(Bloomberg) – e expects China to record Asia’s fastest growth in environmental, social and corporate governance (ESG) investments. This would happen as the country increased the assets of exchange-traded funds by 18 times in the last two years, according to estimates by Bloomberg Intelligence. China’s initiatives in renewable energy and electric vehicles will direct more funds towards ETFs related to ESG criteria, which will contribute to 20% asset growth in Asia this year, according to BI analyst Esther Tsang. “We are seeing a rebound,” Tsang said. “China is going to dominate.” Even with asset growth over the last two years, China only accounts for a little over 10% of the ESG ETFs under management. Japan leads the pack, accounting for roughly 80% of the $ 40 billion in ESG funds traded on exchanges. Asia lags behind North America and Europe, accounting for less than a fifth of the $ 218 billion in global ETFs in this sector, according to estimates by Tsang and Adeline Diab of Bloomberg Intelligence. Strong performance contributes to China’s asset growth , along with new investment flows. The New York-listed KraneShares MSCI China Environment Index ETF rallied 132% in the past 12 months, driven by its positions in electric vehicle makers Nio Inc. and Byd Co., along with Xinyi Solar Holdings Ltd. The Global X ETF China Clean Energy in Hong Kong has also more than doubled in the past year. Strong returns, coupled with the need to build a more resilient portfolio, are attracting investors to the sector in Asia, said Amy Lo, Co-Head of Equity Asia-Pacific of UBS Group AG in Hong Kong. Surveys by the Swiss bank have shown that 75% of wealth managers already have some sustainable investments.
Nota Original:After 1,700% Asset Growth, China Poised to Lead ESG Push in Asia
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