Growing demand for environment-related investments is driving popularity of sustainability index investing in Japan, according to Aye Soe, managing director and global head of product management at S&P Dow Jones Indices. According to figures from fund consultancy Morningstar, total assets of Japan-domiciled sustainable themed funds grew more than three-fold over the last two years. As of December 2020, assets of these funds stood at US$17.7 billion, up from $5 billion in 2019. “Based on clients’ interest, we see two major investment themes – environmental, social and governance [ESG] and thematics,” Soe says in an interview with Asia Asset Management. She says Japanese investors favour both generic ESG index solutions, as well as benchmarks that are focused specifically on climate and sustainability. She says they are particularly keen on the E component of ESG.