- Retail investors could be the key to unlocking finance for Environmental, Social and Governance (ESG) priorities if barriers are addressed
- Investors in the UAE have the potential to channel billions towards the climate transition
Standard Chartered announced today the launch of its Sustainable Banking Report 2022 titled ‘Mobilising retail investor capital’. The research report, which explores ESG investment opportunities, revealed that retail investors in the UAE can mobilise more than AED 367 billion towards top ESG priorities, particularly the financing of climate transition to net zero. This capital could also play a critical part in bridging funding gaps in the UAE’s other ESG priorities including food and water security as well as pollution and waste management.
The new research by Standard Chartered also identified over AED 30 trillion of investable retail wealth that could be channelled into sustainable investments by 2030 to finance ESG objectives in 10 growth markets. The report also highlights investment barriers currently faced by investors and recommends solutions to expand sustainable investing (SI) into a mainstream asset class.
Mobilising investor capital to finance the climate transition in growth markets
According to the research, the UAE has high potential for growth in sustainable investing, largely due to its rising domestic wealth. The market could mobilise over AED 367 billion in sustainable retail investment by 2030. Across the UAE, more than 40% of investors respectively want to put their money towards addressing climate issues.
The top ESG priorities for investors in the UAE include:
- Climate change and carbon emissions (38%)
- Energy and resource use (31%)
- Pollution and waste management (26%)
Investor barriers need to be overcome to unlock over AED 411 billion
The report further highlights the need for investor and market-specific barriers that need to be overcome to translate this investor interest into actual impact.
Investors in the UAE identified the following as their top barriers to increasing their sustainable investments:
- Comparability (47%)
- Perceived low returns/higher risk (45%)
- Comprehensibility (44%)
These findings demonstrate how financial institutions can play a critical role in unlocking available capital by breaking down these barriers for retail investors, using analysis based on investor behaviour and motivations. The report shows the need for clear action to:
- Democratise access to sustainable investments by making more solutions available in more markets via digital platforms
- Provide clear and transparent information
- Address investor apprehensions and provide data-led advice on how to match their ESG priorities with the right solutions
Commenting on the report, Dr. Owen Young, Head of Affluent and Wealth Management for Africa, Middle East and Europe at Standard Chartered Bank, said: “Our global research reveals a significant amount of retail investor wealth which can flow into sustainable investments should the investment barriers be overcome. We know that a rapidly growing number of our clients are seeking to make a positive impact on the environment and in society, and there is significant appetite in the UAE to take ESG investment from a niche play to a mainstream investment strategy. As a bank, we have the expertise and solutions that can help investors achieve both profit and purpose while being able to address the need to enable the shift now for a more sustainable future.”