The push by Asia-Pacific asset owners and money managers to take environmental, social and governance considerations into account in managing their fixed-income investments will power ahead this year despite some COVID-19 speed bumps, market participants say.
The region's ESG momentum hasn't been able to entirely sidestep this year's coronavirus mayhem.
Money managers, who declined to be named, said one high-profile RFP they anticipated in May or June — an up to $2 billion ESG-focused fixed-income allocation by Taiwan's NT$4.2 trillion ($140.4 billion) Bureau of Labor Funds, Taipei — has been pushed back to the second half of the year.
A BLF spokeswoman said in an email the bureau's ESG fixed-income plans are "still under discussion."
Meanwhile, for the quarter ended March 31, global issuance of green bonds, dedicated to funding environmentally friendly projects, dropped 37% from the year-over-year quarter to $33.9 billion, as companies facing heightened uncertainty focused instead on issuing general purpose bonds to boost balance sheet liquidity, said Matthew Kuchtyak, a New York-based ESG analyst with Moody's Investors Service Inc.
In response, Moody's slashed its full-year forecast for green bond issuance to between $175 billion and $225 billion, from a February forecast of $300 billion.
Market participants predict such setbacks will prove fleeting in a region where growing numbers of regulators, asset owners and asset managers have embraced ESG investing in recent years.
Mr. Kuchtyak said another modest quarter for green bonds through June could partly be offset by record issuance of social bonds and sustainability bonds, a reflection of the "sense of interconnectedness" of environmental and social concerns inspired by the COVID-19 crisis. He said he sees no change to the strong five-year outlook for green bonds.