Joining financial institutions around the world, Kenanga Investment Bank, a homegrown brand with almost 50 years of experience and expertise in the capital markets, has tuned up its focus on ESG as an evolution in accelerating its sustainable business operations. The country’s leading independent investment bank, has not only been improving its enterprise ESG adaptation, but it has as well, been leveraging its vantage position as an investment bank to power responsible investing in this part of the world, meeting rising demands.
Kenanga Investment Bank and its subsidiaries embarked on this journey of sustainability through various transitions across the Group. Its asset management arm, Kenanga Investors Group, has begun integrating ESG considerations into three main aspects of its business – firm-wide, products and stock-level. Its journey to responsible investing began in 2017 when it became a signatory to the Malaysian Code for Institutional Investors. “We have since developed practices to support the Code and internal principles that are embedded throughout our investment value chain,” said Ismitz Matthew De Alwis, Executive Director and Chief Executive Officer of Kenanga Investors Group.
“We include relevant ESG screening assessments, qualitative and quantitative, into the decision-making process, in addition to our existing criteria. Based on assessment results, we assign an ESG rating score to all stocks in our investing universe. Post-investments, we use our position as shareholders to exercise our voting rights on material resolutions to ensure ESG alignment,” De Alwis elaborated.
Kenanga Investors has been carrying out its fiduciary duty to clients to embrace purposeful considerations and focus on ESG factors which affects the investee companies. Various ESG-integrated approaches have been implemented across the traditional and alternative asset classes, active and passive investing, and public and private markets. Kenanga Investors now offers investors a more robust portfolio stemming from ESG analytics which considers factors such as carbon efficiency and quality of governance to mitigate risks or capture new opportunities aside from the standard quantitative and qualitative metrics.
“The pandemic has been a wake-up call for investors, who are now searching for sustainable investments that are better placed to avoid risks of being financially impacted by such catastrophic events in future. Kenanga recognises the role we play in achieving this common goal and is continuously working to manage ESG risks in our investment activities and help our clients transition to better ESG performing and greener business models,” added De Alwis.
This year, it expanded upon its Kenanga Sustainability Series which made its debut in 2021, with a suite of multi-asset class products rooted in sustainability considerations.
In Asia Pacific alone, institutional ESG assets under management have grown more than 30% a year in the last five years on average, according to data from Broadridge. This rapid growth can be attributed to strong inflows in 2020, and there is no sign of slowing down. It is expected that ESG investing in Asia will continue its growth momentum over the next five years, and investors in Asia are responding by adopting sustainable investing in different ways. Around 79% of investors in Asia-Pacific increased ESG investments “significantly” or “moderately” in response to Covid-19, according to MSCI 2021 Global Institutional Investor survey.
“As the first Malaysian investment bank to be member of the world’s largest corporate sustainability initiative, United Nations Global Compact network, we are not only committed to establishing a culture of integrity and living up to our fundamental responsibilities to people and the planet, but also, setting an example of how we approach and support responsible investing in Malaysia,” commented De Alwis.
Today, there is a growing awareness and expectation among investors to focus on non-financial outcomes such as climate change and social well-being. Investors want to seek positive impact alongside competitive financial results. The increasing awareness and expectations among Malaysian investors will continue to chart demand for ESG investments.
With this in mind, Kenanga continues to drive the sustainability theme across its business operations and will continue to bridge the gap between retail investors and more sophisticated products that were previously only available to institutional and accredited investors.