KUALA LUMPUR (November 10): Innovation is key to enabling the asset management industry to serve and meet the needs of investors seeking sustainable and responsible investing (SRI), said Datuk Zainal Izlan Zainal Abidin, Deputy Managing Director of Securities Commission Malaysia (SC).
He said asset managers can and should continue to offer more sustainability-related products that meet the different risk-return profiles of investors – institutional and retail, as well as high net worth individuals in different asset classes. .
“Given the important commonalities in the principles underlying Islamic and sustainable investing, innovation in product development can generate solutions that meet both segments,†he said at a virtual presentation on the third day of Sustainable Finance Week at Expo 2020 Dubai on Wednesday (November 10).
Zainal Izlan said there are clear benefits for Sharia law and environmental, social and governance (ESG) criteria to be incorporated into product structures, as these can be offered to a broader investor base. .
He said other initiatives such as building indices can facilitate the growth of sustainable investment.
“Relevant indices provide useful benchmark information and also enable the development of products such as exchange-traded funds,†he said.
He said that achieving the desired results in growing sustainable investments requires the collaboration of multiple stakeholders.
“The asset management industry is a key part of the ecosystem, but achievements would require the collective participation of other stakeholders such as Sharia advisers, rating agencies, data providers and others.
“At the same time, cooperation between industry and regulator is essential to ensure that development is facilitated while preserving market integrity,†he said, adding that cross-border collaboration is also important for further expand the sustainable investment market.
He said the assets under management of the Principles for Responsible Investment (PRI) signatories grew to US $ 121.3 trillion in March 2021, from US $ 81.7 trillion in 2018.
The number of PRI signatories had risen to 3,826 in March 2021, down from just 1,951 three years earlier.
“Supported by the commitment to integrate ESG criteria into their investment processes, these asset managers and potentially many others could be the catalyst to move the needle towards achieving a carbon neutral world d ‘by 2050 “, he added.
