DBS Private Bank aims to have more than 50% of AUM in sustainable investments by 2023
SINGAPORE, 19 Mar 2021 - DBS is further entrenching its position as Asia’s industry leader in sustainability as its private banking arm announces plans to further its sustainability agenda. DBS Private Bank stated its commitment to grow its suite of sustainable investments to more than half of its assets under management (AUM) by 2023, and galvanise clients in the region to adopt environmental, social and governance (ESG) standards in their investments. The bank will also widen and deepen clients’ access to its ecosystem of social enterprises (SEs) in the region to fund, support and develop these enterprises, which include next-gen tech leaders that are innovating breakthrough solutions to positively impact communities.
These initiatives, which were announced today, are part of DBS Private Bank’s three-pronged sustainability approach – drive ESG investing, advocate responsible business practices, and create social impact. They are also in line with DBS’ bank-wide ethos and commitment to being purpose-driven, and to create value for the long-term in a balanced and responsible way.
Sustainable investments to make up more than 50% AUM by 2023
DBS Private Bank has set a target of having more than half of private banking AUM in sustainable investments by 2023, up from 41% today. Taking reference from the MSCI ESG Leaders Index and leading global asset managers, DBS Private Bank defines sustainable investments as those rated BBB and above (based on MSCI ESG Ratings).
Joseph Poon, Group Head of DBS Private Bank said, “Sustainable investments have become increasingly important in value-adding investment portfolios in the long run. However, their pace of growth is being compromised as there is still no clear definition for sustainable investments today. There is also no single established industry benchmark to rate ESG. We decided to take the lead in challenging this status quo, and were among the first in Asia to integrate MSCI ESG ratings into our product suite. By taking this step, we are not only availing greater transparency of our offerings, but are also holding ourselves accountable to our pledge to boost our share of sustainable investments.”
Asian assets tend to have lower ESG ratings than their Western counterparts – a reflection of the nature of the region, which is home to many developing nations that are still in early stages of economic development and living standards. According to MSCI, the proportion of laggard companies (B & CCC rating) in Asia stands at 13.5%, as compared to 5.5% in the West.
Asia has however started to catch-up in recent years, amid rising consumer expectations and government calls for businesses to focus on sustainability issues. DBS Private Bank – with its wide holdings of Asian assets, deep understanding of the region’s diverse heritage, and strong network of Asian clients – is well-positioned to play a leading role in ESG advocacy and mobilise clients towards positive change, in a way that’s congruent with the region’s unique blend of economic growth and sustainability aspirations.
To boost sustainable investments, DBS Private Bank will expand its product suite to include new sustainable investment solutions. This year alone, the bank is looking at onboarding more than 10 products, comprising a range of exchange-traded funds, mutual funds and private equity investments. This includes a Global Environment Fund which will soon be launched in Q1, and will grant customers diversified exposure into a range of decarbonisation themes including Renewable Energy, Electrification and Resource Efficiency.
DBS Private Bank will also review clients’ portfolios to improve their ESG rating through targeted advisory and recommendations. Relationship managers are mandated to relook their clients’ portfolios, and proactively engage those with lower ESG ratings to replace lower-rated assets with higher-rated alternatives where suitable, or deploy new funds into sustainable investments.
It will also formalise how ESG is assessed through the launch of a portfolio-weighted ESG rating methodology in Q2 – an Asia-first initiative that will move beyond rating individual holdings, to rating clients’ portfolios holistically. This is premised on the fact that selecting Asian assets solely based on their current ESG ratings may not be representative of their long-term potential, since they need time to improve their ratings. By adopting this new methodology, relationship managers and clients will be empowered to factor in their long-term view of each constituent investment and manage the portfolio more dynamically – for example, by retaining select low-rated holdings that are slated for growth while still ensuring the overall portfolio rating is strong.
Client education and engagement will continue to be a priority for DBS Private Bank. Beyond keeping clients informed on the latest insights and developments in ESG, the bank also rolled out a new ESG-focused webinar series that kicked off today. The session gathered investment experts, social entrepreneurs and clients from across the region for a meaningful and impactful discussion around investing for good.
Connecting the dots: Enabling clients to do good and do well through business & social impact opportunities
DBS Private Bank, together with its Institutional Banking and DBS Foundation teams, is also helping clients to understand how sustainable business practices can positively impact their businesses and all stakeholders. The ultimate objective is to enable clients to maximise their ESG impact through investments, the businesses they operate, as well as their philanthropic or social impact efforts.
“We’re privileged to be working with clients who are business-owners or in positions of influence, and are well-placed to drive positive change through their commercial enterprises; many also have the means and the desire to give back to society, not only through traditional philanthropy, but also by supporting social enterprises dedicated to addressing pertinent societal gaps. As a trusted partner on their wealth journey, our role has gone beyond growing and managing their wealth. Increasingly, we help our clients to “connect the dots” on multiple fronts so they can build meaningful and purposeful legacies for their future generations,” said Poon.
In particular, clients are expressing stronger interest in learning about social enterprises (companies with dual bottom-lines of profit and impact), a trend that accelerated when the pandemic emerged and brought social issues to the fore. Social enterprises came up more frequently in client conversations last year, as compared to past years.
DBS Private Bank works closely with DBS Foundation to connect clients with social enterprises in the region, and explore opportunities for clients to scale these enterprises’ growth through funding, mentorship or business opportunities. With food security being one of the world’s most pressing challenges today, the bank plans to connect clients with more innovative social enterprises in this space, including the likes of Singapore-based agritech start-up Polybee, which leverages cutting-edge technology such as aerial robotics and computer vision to increase agricultural productivity and boost food security.
Earlier today as part of the Lee Kuan Yew Global Business Plan Competition, Polybee was awarded the DBS Tech for Impact Prize, which will give the start-up access to DBS’ technology and innovation ecosystem, and marketing resources worth SGD 50,000. It was also the “People’s Choice” winner at the DBS Foundation Social Impact Prize competition last October, where it bagged a cash prize of SGD 25,000.
Re-disseminated by The Wealth and Society