Thai ESG sustainability funds soaring in value
Going green can earn you more greenbacks. Investors are betting their dollars on sustainable Thai businesses as the asset value of Thai ESG mutual funds has quadrupled to over $1 billion since 2019, according to Morningstar Research.
ESG funds consist of companies that have demonstrated their commitment and performance on environmental, social and governance issues. “Growing environmental awareness has been drawing investors to ESG funds expecting they will produce high returns,” said Chicago-based Morningstar.
In Thailand, ESG funds are still comparatively new, but many analysts expect they will grow rapidly because investors view companies that meet ESG standards as more likely to experience prolonged growth. In choosing them, investors are betting on the future.
The three largest Thai ESG funds are Baillie Gifford Positive Change, BGF Sustainable Energy and Janus Henderson Horizon Global Sustainable Equity.
All three funds were affected by the pandemic in early 2020, but the Baillie Gifford Positive Change fund has registered a considerable jump in returns.
Morningstar Thailand Research said that more than $356 million flowed into Thai ESG mutual funds during the first two months of this year. The firm pointed out, though, that the largest Thai ESG funds don’t focus solely on Thailand-based companies and actually contain more global firms.
In 2019, Thai ESG funds benefitted from about $100 million in inflows. In 2020, they enjoyed a fourfold increase with net inflows of $486 million.
Sustainability, biotechnology and green technologies are key pillars of Thailand’s national development strategy, and Thai companies have increasingly been adopting policies and practices in line with sustainability. In Thailand, ESG is on the rise.