The Asian arena

The value of world SRI market is estimated for 21.4 billion US$, from what 11.05 billion EUR falls on the European market (Global Sustainable Investment Review GSIR, 2014). Although Europe is a global leader, a similar developing markets such as the USA, Canadian or Australian are gaining more popularity. Asian countries became a vital part of market too. Both world economic powers like China and Japan, but also South Korea, Singapore and Malaysia are joining this global trend. Nowadays the socially responsible investment seems to be an investment direction of a modern, post-crisis international financial markets.

Table 1. Socially responsible investment asset growth in Asia (ex Japan) in 2011 and 2013 (min USD)

Source: Asia Sustainable Investment Review, 2014, P.12.

Sustainable investment assets in Asia, although still comprising only a small share of world total professionally managed assets, stand at 53 billion US$ in 2015, an increase from the 40 billion US$ reached at the beginning of 2012. The collected data include twelve SRI markets, such us Bangladesh, China, Hong Kong, India, Indonesia, Malaysia, Pakistan, Singapore, South Korea, Taiwan, Thailand, and Vietnam (table 1). The three largest Asian markets for socially responsible investments, by asset size, are Malaysia, Hong Kong and South Korea. The fastest growing are Indonesia and Singapore markets. According to historic maturity, the most developed market in the Asia region is Japan. Innovational products concern ESG policies like impact investing, bonds and green real estate are gaining popularity in Japan.In the Asia region in 2016 it is observed that a growth number of sustainability reporting instruments by about 75% since 2013.This initiatives came more often from financial market or industry regulators than governments. Increased attention applied to the nonfinancial activities of companies and transparency of reports influence on development of socially responsible investment market in Asia. The key participants in this market are institutional investors, asset managers, individual investors and investment banks. The involvement of so many actors as a financial market affect the number of potentially engaged in SRI market development. The SRI fund market is strongly affected by religious attitude. Islamic funds are the major contributor to sustainable investment assets in Asia, mostly in Malaysia and Indonesia, where the government policy supports development of the Islamic fund market. Another important form of socially responsible investment in Asia is impact investing and community investment. This investments approach concentrate on financial and social inclusion. The capital from investors is directed to microfinance programs.

Table 2. The popularity of socially responsible investment strategies for the Asian market at the end of 2012 and 2014 (billion USD)

Source: Own study based on: Asia Sustainable Investment Review, 2014, P.30.

Microfinance offers access to capital to people of low income, who have been excluded from the formal banking sector or enterprises on the early stage. Microfinance programs provide access to credit, equity and basic banking products. The most well-known and in the same time the most developed product is a microcredit. Microcredit provides financial capital for poor or entrepreneurs who toil in the informal, poverty sectors in developing country economies. The motherland of microcredit is Asia exactly. The best known examples coming from the Grameen Bank of Bangladesh, which was established by Professor Muhammad Yunus.Asia Stock Exchange is playing significant role in developing regional socially responsible investment markets. One of the targeted method is enhancing ESG reporting by companies listed on stock exchanges. Many initiatives are taken in this field. The Shenzhen Stock Exchange (SZSE) in 2006 and the Shanghai Stock Exchange (SSE) in 2008 as first have introduced guidelines for listed companies. The important driver for the SRI market in Asia, therefore, will be concentration on environmental issues relating to climate change, energy and resource scarcity. In 2016, during China’s leadership of the G20, according to research results taken by Green Finance Study Group (GFSG), China sums up its needs around 460 billion US$ yearly to finance green investment plan (G20 Green finance).