DBS Private Bank says it is committed to growing clients' allocations to sustainable investments from a current share of 41 per cent to over 50 per cent of assets under management (AUM) by 2023.

 

It will drive this in three ways: Firstly, by expanding its sustainable product suite secondly, by taking a portfolio approach in evaluating its clients' holdings via a " portfolio-weighted ESG rating methodology" and thirdly, by continuing efforts in client education and engagement.

 

The initiatives come under DBS Private Bank' s three-pronged approach to sustainability - to drive ESG investing, advocate responsible business practices and create social impact.

 

ESG refers to investing via an environmental, social and governance lens. DBS' wealth management has total AUM of about S$264 billion.

 

In a statement, DBS said it will also widen and deepen clients' access to its ecosystem of social enterprises in the region to fund, support and develop the enterprises.

 

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 (adding value to) investment portfolios in the long run. However, their pace of growth is being compromised as there is still no clear definition of sustainable investments today. There is 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."

 

For discretionary portfolios, care is taken to select securities or assets which are sustainable.

 

Asian assets tend to have lower ESG ratings than their Western counterparts. This reflects the nature of the region, where many developing nations are in the early stages of economic development. As observed in the MSCI indices, the proportion of laggard companies rated B and CCC in Asia stands at 13.5 per cent, compared to 5.5 per cent in the West.

 

DBS said that its wide holding of Asian assets, understanding of the region' s heritage and strong network of Asian clients enable it to play a leading role in ESG advocacy.

 

In terms of product suite, the bank aims to on-board more than 10 products this year, comprising exchange traded funds, mutual funds and private equity funds. The products include a Global Environment Fund, which offers exposure to a range of decarbonisation themes such as renewable energy and electrification.

 

Clients have also expressed stronger interest in learning about social enterprises, a trend that has accelerated with the onset of the pandemic. Mr Poon said: " 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 desire to give back to society, not only through traditional philanthropy but also by supporting social enterprises dedicated to addressing pertinent social gaps."

 

DBS Private Bank works closely with DBS Foundation to connect clients with social enterprises in the region and explore opportunities for clients to help the enterprises grow through funding, mentorship or business opportunities.