Emerging markets including those in Asia offer some of the best environmental, social and governance (ESG) investment opportunities, a report by Manulife Investment Management has concluded.

The Manulife report, titled Global Intelligence, added that Asian economies, which make up the majority of the MSCI Emerging Markets Index, are the largest investors in low-carbon energy sources.

Over the next two decades, Asia is expected to drive more than 60% of the global energy demand which would address a priority for climate change.

However, the asset manager noted that aggregate investments in sustainable businesses would need to increase substantially for emerging market growth in the long term.

Despite emerging markets offering growth opportunities for investors, failure to coordinate climate policies, practices and investments would be a hindrance.

Key findings of the Global Intelligence report also mentioned that it was now necessary to apply an ESG lens to macro analyses as it highlighted that ESG factors, including biodiversity and stewardship, are playing an increasingly important role in macroeconomic valuations and the creation of value across asset classes.

Paul Lorentz, president and chief executive officer of Manulife Investment Management, said: “One enduring outcome of the past year is the importance of sustainability.

“Against this backdrop, we devote much of the latest edition of Global Intelligence to examining those sustainability scenarios and their impact on investments and investment decisions.”

Manulife highlighted the loss of biodiversity as a key area of concern for investors, however, a lack of clarity from governments on activities that do harm leave investors needing to assess their allocations that best support ecological preservation.

As access to biodiversity data is limited and there is not a consensus on how to best make decisions that protect biodiversity, Manulife places science at the forefront of investment decisions in this space.

The asset manager highlighted the need to rely on scientific information, including measurements on species abundance, water quality and soil carbon to make impactful investment choices.

BNP Paribas Asset Management recently highlighted the importance of biodiversity as it partnered with non-profit CDP in May to launch a corporate reporting framework on biodiversity. 

The French group reaffirmed its commitments to biodiversity in June when it unveiled a new fund that would invest in listed equities that offer solutions to tackle biodiversity degradation.