Europe may have taken the lead on ESG compliance, but sustainability is becoming an ever more important issue in Asia as well, according to a new survey of Asian family office professionals, collectively responsible for over €15 billion in AUM, conducted by Ocorian.
The study reveals that ESG is an increasingly key part of fiduciary duty for family offices and the focus on environmental, social and governance principles will increase over the next three years, partly due to generational change.
“There is growing interest in ESG as well as private markets and digital assets but overwhelmingly younger family members in Asia want to ensure the long-term growth of the office, underling the fact that growth in the sector is strong,” said Novia Lu, business development director APAC, Ocorian. “As more family offices are established, increasingly more family members want to play an active role in managing their assets in the most efficient way.”
Nine out of ten (90%) professionals agree that ESG principles are a key consideration when it comes to Asian family office investment priorities, with 52% strongly agreeing. The research shows that almost all (97%) believe ESG is part of a family office’s fiduciary duty and 87% predict an increasing focus on ESG principles from a fiduciary perspective over the next three years. Almost half (45%) predict a dramatic increase.
Nine out of ten (90%) family office professionals in Asia said they are seeing their clients looking to include crypto and digital assets within their investment strategies. There are a number of challenges for family offices looking to invest in crypto – as well as being a high-risk asset, they can be faced with regulatory and practical challenges as well as inconsistencies between global tax regimes – therefore it’s vitally important that they access the right expertise to support them. However, 74% are struggling to outsource to third parties who are willing to provide support with the regulation and reporting obligations of digital assets.
Family offices in Asia are set to outsource more key services as pressure builds from clients for a wider range of support and more sophistication. Around 90% say outsourcing will grow over the next three years with 42% predicting a dramatic increase over the period.
The key reason for increased outsourcing identified by the research is pressure from family office clients for more sophisticated services. Around 74% of family office professionals predicting an increase in outsourcing say family offices in Asia want more specialised services. However, 52% say the rising risk appetite of family offices is also driving increased demand for outsourcing.
The research found family offices already make extensive use of third-party support. Around 71% say they use third parties for support on liquid assets such as individual listed stocks while 61% turn to third parties for help with illiquid assets such as investing in private equity. Around half (52%) use third parties for personal financial management and 48% for wealth planning.