Retail Investor Capital offers growth opportunity for sustainable investing

  • Retail investors can hold the key to unlocking funding for environmental, social and governance (ESG) priorities if barriers are removed
  • Investors in the UAE have the potential to channel billions into the climate transition

Standard Chartered today announced the launch of its Sustainable Banking Report 2022, entitled ‘Mobilizing retail investor capital’. The research report, which examines ESG investment opportunities, revealed that private investors in the UAE can mobilize more than AED 367 billion for the highest ESG priorities, especially financing the climate transition to net zero. This capital could also play a critical role in bridging funding gaps in the UAE’s other ESG priorities, including food and water security, pollution and waste management.

The new Standard Chartered research also identified more than AED 30 trillion in investable retail assets that could be channeled into sustainable investments by 2030 to fund ESG goals in 10 emerging markets. The report also highlights investment barriers investors currently face and recommends solutions to extend sustainable investing (SI) into a mainstream asset class.

Mobilizing investor capital to finance the climate transition in emerging markets

According to the research, the UAE has great growth potential in sustainable investing, largely due to rising domestic wealth. The market could mobilize more than AED 367 billion in sustainable retail investment by 2030. In the UAE, respectively, more than 40% of investors want to spend their money on tackling climate problems.

The top ESG priorities for investors in the UAE include:

  • Climate change and CO2 emissions (38%)
  • Energy and resource use (31%)
  • Pollution and waste management (26%)

Barriers to investors must be overcome to unlock over AED 411 billion

The report further highlights the need for investor- and market-specific barriers to overcome in order to turn this investor interest into real impact.

Investors in the UAE identified the following as their main barriers to increasing their sustainable investments:

  • Comparability (47%)
  • Perceived low return/higher risk (45%)
  • Comprehensibility (44%)

These findings show how financial institutions can play a critical role in unlocking available capital by breaking down these barriers for retail investors, using analytics based on investor behavior and motivations. The report shows that clear measures are needed to:

  • Democratizing access to sustainable investments by making more solutions available in more markets through digital platforms
  • Provide clear and transparent information
  • Address investor concerns and provide data-based 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, the Middle East and Europe at Standard Chartered Bank,: “Our global research reveals a significant portion of private investor wealth that can flow into sustainable investment if investment barriers are overcome. We know that a rapidly growing number of our clients want to have a positive impact on the environment and society, and there is a great need in the UAE to move ESG investing from a niche market to a mainstream investment strategy. As a bank, we have the expertise and solutions that can help investors achieve both profit and purpose, while addressing the need to enable the shift to a more sustainable future now.”

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