What is ESG Investing in the Philippines? - The Thrifty Pinay

ESG Investing in the Philippines:

Whatever time of the year it is, we Filipinos are always looking for the best investments in the Philippines. Having said that, ESG Investing in the Philippines may be something you want to consider this year. Let’s learn more about it in this post so you can see if this is exactly what you need in your portfolio today.

What is ESG Investing in the Philippines?

ESG stands for environmental, social, and governance investing, and is understood as a form of investing that incorporates the ESG factors in investment decisions. It is used interchangeably with the terms responsible investing, sustainable investing, ethical investing, and impact investing.

How important is it? The significance of ESG factors in investment decision-making was highlighted by Larry Fink, Chairman and Chief Executive Officer (CEO) of BlackRock, the world’s largest asset manager, in his annual letter to CEOs in 2018. Mr. Fink said,

“Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.”

With regards to this, Philippine regulators have steadily implemented a stream of policy measures designed to enable investors to consider ESG factors in their investment. This is also to encourage companies to behave in a manner that benefits our society and the environment.

Is ESG Investing profitable in the Philippines?

While ESG is a non-financial factor of a company, the past years have shown that portfolios of funds that incorporate ESG and sustainability have outperformed those that don’t.

For example, US financial services firm Morningstar found that for 10 years, 80% of blend equity funds investing sustainably outperform traditional funds. They also found that 77% of ESG funds that existed 10 years ago have survived, compared with 46% of traditional funds.

Amidst the COVID-19 pandemic, the importance of ESG has only strengthened as investors look for more resilient investments amidst economic uncertainties brought about by the pandemic.

Where can I invest in ESG Funds in the Philippines?

Fortunately, several banks, insurance companies, and mutual funds in the Philippines already have ESG funds that we can invest in. Here are a few to name:

1. BDO ESG Equity Fund

BDO launched in December 2015, the first UITF in the Philippines that employs a socially responsible investing strategy. They offer an ESG-linked fund that aims for long-term capital appreciation by substantially investing in listed companies which they believe to exhibit good environmental, social and governance (ESG) practices. Suitable for aggressive risk type of investors, their ESG equity fund benchmarks the PSE Index and the minimum investment needed is only P10,000.00.

2. BPI Invest Sustainable Global Bond Fund-of-Funds

As one of the three funds comprising the BPI Invest Sustainable Funds suite, it follows a multi-theme strategy and multi-asset offering to cater to the unique needs and profile risks of investors. It aims to outperform its benchmark which is the Bloomberg Barclays Global Aggregate Bond Index (Unhedged).

Minimum Initial Investment is USD 1,000.00 and is suitable for those with a moderately aggressive risk profile.

3. BPI Invest Sustainable Global Balanced Fund-of-Funds

As the second of BPI’s three-part Sustainable funds, it seeks to achieve long-term capital growth by investing in a diversified portfolio of global equity and fixed income collective investment schemes which integrates ESG criteria in its investment process. This includes the incorporation of sustainability goals and facilitation of flow of funds towards green economic activities, climate change mitigation and adaptation project and it aims to outperform its benchmark which is the 50% MSCI AC World Index + 50% Bloomberg Barclays Global Aggregate Bond Index (Unhedged).

Minimum Initial Investment is USD 1,000.00 and is suitable for those with an aggressive risk profile.

4. BPI Invest Sustainable Global Equity Fund-of-Funds

As the third of BPI’s three part-Sustainable funds, it is similar to its first two counterparts mentioned above, however, it aims to outperform its benchmark which is the MSCI AC World Index.

Minimum Initial Investment is USD 1,000.00 and is suitable for those with an aggressive risk profile.

5. RCBC Sustainability Bond

RCBC’s policy is to promote sustainable practices that will minimize negative environmental, social and reputation impact of their financing activities and their clients’ operation.  As one of the major banks leading the efforts toward sustainability, they have been awarded in the prestigious ESG Corporate Awards.

However, as of this writing, RCBC has announced the closure of their sustainability bond offer. For announcements of newly offered bonds, you may check out their site for any updates.

6. FWD Global Good ESG Fund

You can now invest in FWD Global Good ESG Funds that give you access to companies that strive to make a positive change in the world by taking into account environmental, social and governance factors. As you build your wealth, you can take comfort in knowing you are sustainably investing and making a positive change for the future.

Available in peso and dollar denominations, this fund is invested in global equities suited for aggressive investors and is managed by BlackRock, one of the biggest and most reputable fund managers worldwide

Environmental, Social, and Governance are definitely three words that are beginning to play a significant role in investment decisions. As a form of sustainable investing, investors should ponder on how to take into account some non-financial performance indicators which focus on Environmental, Social, and Governance risks, aside from the usual financial metrics we use.

ESG Investing in the Philippines

By Ameena Rey-Franc

Recognized as one of the Top Finance Blogs in the PH. Ameena Rey-Franc (founder of TTP) is a former Banker and BS Accountancy graduate turned Blogger, Keynote Speaker, and entrepreneur. Currently an RFP delegate, she is also the Author of a book about Financial Resilience and has held seminars for reputable companies like GrabFoodPH, Pru Life UK, VISA, JPMorgan Chase& Co., Paypal, Fundline, Moneymax, and many more. The Thrifty Pinay's mission is to empower women to LEARN, EARN, and be FINANCIALLY-INDEPENDENT no matter what life stage they are in.