Citibank Korea rolls out ESG-focused products

A Citibank Korea employee speaks with her client at one of the bank's branches in this file photo. Courtesy of Citibank Korea

By Park Jae-hyuk

Citibank Korea has rolled out a series of products related to environmental, social and corporate governance (ESG) values. The criteria are regarded as an “unstoppable trend” and key investment theme of the year for retail investors, the U.S. banking giant's local subsidiary said Wednesday.

The product lineup ranges from overseas ESG funds with main exposure to Europe, where ESG is regarded as one of the traditional investment themes, to domestic equity funds that focus on responsible investment.

The bank currently offers five products related to the environment, climate change and responsible investment. Buoyed by increasing interest from customers, the products account for 10.6 percent of the total balance of the bank's mutual funds.

“Investing in an ESG fund means making a sustainable and socially responsible investment,” said Gidon J. Kessel, head of Citibank Korea's wealth management product division. “Since the elements of ESG are reflected in the decision-making process for investment, there are various types of underlying assets for ESG investments. To name a few: global businesses that adopted ESG principles in their corporate operation standards, renewable energy businesses, social enterprises and investment products that are in line with the purpose of ESG.”

According to Kessel, Asia has been skeptical about the performance of ESG investments, whereas many local companies in Europe have adopted ESG management styles and investors are highly willing to invest in such funds. However, he noted there has been a change in that atmosphere as ESG investments outperform non-ESGs.

“More and more companies and governments embrace ESG principles supported by increased global demand and interest, and put more focus on social issues,” he said. “As a result, an increasing number of investors are choosing ESG funds.”

Citibank Korea said studies on the potential performance growth of ESG investments showed that companies that uphold strong governance structures and pursue a responsible business culture are more likely to outperform those on the other side. The bank added growing government support and regulatory changes for the environmental business sector have fueled investment demand.

In this regard, Citibank Korea invited an ESG fund portfolio manager from England and held an online seminar, March 16, to help customers better understand ESG investment.

The bank has also shifted gears to strengthen its ESG product lineup.

A Citibank Korea official said the bank is reviewing the introduction of overseas bonds, such as green bonds issued by companies investing in environmental projects and structured products with underlying assets of ESG-focused exchange-traded funds (ETFs), in addition to its mutual funds.