PETALING JAYA: Environmental matters are considerations that have become a major criteria for institutional investors looking for places to put their money.
They are more likely to seek out companies that have started efforts to meet environmental, social and governance (ESG) requirements.
However, little can be said about the average retail investor’s attitude towards such matters.
A recently published Schroders Global Investor Study 2022 that covered 24,000 retail investors across 33 locations worldwide showed that most investors considered climate change a high priority.
In Malaysia, the study shows, 67% of retail investors who claim they have expert advice believe that investing in sustainably can support positive change when it comes to challenges such as climate change.
Unfortunately, not all are prepared to put their money where their mouth is.
For many retail investors, putting their money in the climate change sector continues to take a back seat to basic needs, according to Thong Pak Leng, vice-president of research at Rakuten Trade Sdn Bhd.
He told FMT Business that while institutional investors weigh ESG scores highly, the retail investor tends to focus on the financial considerations.
“As Malaysia is still a developing country and industrialisation is very important, we will have to look after our rice bowl first, then get more advanced and educated on climate change issues,” he said.
Nonetheless, he said, it is a good start that companies are now making efforts to meet ESG requirements, but the investing public would need some time to take the climate issue more seriously.
Sustainability and climate change specialist Renard Siew said the concept of responsible investing is beginning to gain traction in the corporate world but among retail investors there are as many who care about the environment as there are those who don’t.
Siew of the Centre for Governance and Political Studies said companies have the option of different approaches when it comes to funding climate initiatives.
“They can go through a positive or negative screening process. For instance, they can choose not to invest in coal plants or they can take the thematic route, where they choose to invest in the renewables sector or go for value-based investing,” he told FMT Business.
However, he said, for the average retail investor awareness is still limited.
“Malaysians who are aware are taking personal action but there are many who have limited knowledge on the impact of climate change and have not connected the dots between extreme weather events and how their actions lead to higher emissions,” he said.
However, he believes awareness is slowly but surely growing amongst Malaysians about climate change.
“Awareness about the impact of climate change is ramping up in this region given the many extreme events that have happened. The key is how we turn awareness into concrete action,” he added.
Psychologist Joel Low said that while Malaysians do care about climate change, man’s first instinct is to take care of himself.
“There is too much evidence of drastic weather patterns happening around us, such as the infamous floods and changes in weather patterns for us to ignore,” he said.
“However, human behaviour is predictable. People tend to take care of themselves first before looking beyond,” he said.
“Our capacity to care for others is limited by the instinct to meet our most immediate needs first and foremost,” he added.
But at the corporate level, he said, businesses invest in climate change efforts mainly because it is a great marketing strategy.
“Many companies are cognisant of the fact that their brand message can be a great driver of attention and traffic to their products and/or services. So it might benefit them in the long run to champion things like climate change efforts,” he added. - FMT
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