DBS furthers sustainability agenda with MSCI ESG Ratings
DBS has announced that it has adopted MSCI ESG Ratings for its wealth management business, with the aim of providing clients with greater transparency over the environmental, social and governance characteristics of their investment portfolios.
This comes amidst growing interest in ESG investing (defined as the consideration of ESG factors alongside financial factors in the investment decision-making process) and aligns with the bank’s commitment to enhancing clients’ understanding on this front.
MSCI ESG Ratings score companies on their ESG risk exposure and risk management abilities relative to industry peers. Apart from identifying ESG risks and opportunities within investment portfolios, the ratings also serve as an additional tool for investment analysis – allowing investors to go beyond conventional financial analyses when assessing how their investments measure up to others, and therefore make more informed investment decisions.
DBS has adopted MSCI ESG Ratings (which covers equities, bonds and funds) as of November 2019, which will be embedded in DBS’ suite of wealth products, advisory and discretionary portfolio services. The ratings will be availed to wealth clients through their relationship managers upon request. DBS will also explore leveraging this capability to introduce ESG offerings in retail applications.
Though relatively nascent in Asia, ESG investing is a growing trend that cannot be ignored. According to the CFA Institute, ESG assets under management in Asia have been the fastest growing since 2014. This momentum is set to continue, driven in part by the impending intergenerational transfer of wealth to sustainability-conscious millennial investors – a 2017 FactSet study found that 90% of the high net worth millennials surveyed want to increase their allocations to responsible investments within five years.
Marc Lansonneur, Head of Managed Solutions, Balance Sheet Products & Investment Governance, DBS Wealth, said “Clients’ attitudes towards ESG investing are becoming increasingly favourable. Encouraged by growing evidence of the correlation between robust ESG practices and strong corporate financial performance, more are expressing interest in incorporating ESG into their decision-making processes. However, they are often hampered by the lack of historical ESG data or a recognised sustainability benchmark. By adopting MSCI ESG Ratings and enabling transparent comparability, we hope to address this gap and drive growth in the ESG investing space.”
Lim Beng Eu, Head of Southeast Asia Client Coverage, MSCI, said “MSCI ESG Research is extremely pleased to be working with DBS Bank in their effort to provide their wealth clients with greater transparency on ESG issues. MSCI ESG Research is committed to providing ESG analytic tools and research insights to help investors to better understand and plan for portfolio risks and to make better informed investment decisions.”
This initiative is the latest of DBS’ efforts to provide clients with ease of access to ESG investing. The bank believes a properly structured ESG portfolio allows investors to align investments with personal values and reap the benefits of both, and has introduced a suite of ESG offerings – these include the DBS ESG MSCI Asia outperformance structured note and warrant, which were built on the investment thesis that investing based on ESG principles improves the risk-return characteristics of a portfolio; the inaugural issuance of Women’s Livelihood Bond, the world’s first social sustainability bond listed on a stock exchange; as well as a highly selective programme of ESG.