Retail investors in the UAE have the potential to mobilise more than Dh367 billion towards top environmental, social and governance (ESG) priorities, particularly the financing of climate transition to net zero, Standard Chartered said on Thursday.
A new research by Standard Chartered also identified over Dh30 trillion of investable retail wealth that could be channelled into sustainable investments by 2030 to finance ESG objectives in 10 growth markets.
The UAE seeks to become a net zero nation by 2050, the first Middle East and North Africa nation to do so. To achieve climate neutrality by 2050, the UAE is developing an approach that drives sustainable economic growth. An estimated investment of over Dh600 billion is required in renewable energy as the nation pivots its economy to net zero in 28 years.
The bank’s Sustainable Banking Report 2022 titled “Mobilising retail investor capital” said the UAE’s retail investor capital could also play a critical part in bridging funding gaps in the country’s other ESG priorities including food and water security as well as pollution and waste management.
Dr Owen Young, head of Affluent and Wealth Management for Africa, Middle East and Europe at Standard Chartered Bank, said the global research revealed 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,” said Young.
The research report also highlights investment barriers currently faced by investors and recommends solutions to expand sustainable investing (SI) into a mainstream asset class.
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 Dh367 billion in sustainable retail investment by 2030. Across the UAE, more than 40 per cent 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 per cent); energy and resource use (31 per cent); and pollution and waste management (26 per cent). 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.
According to the report, investors in the UAE identified comparability (47 per cent), perceived low returns/higher risk (45 per cent); and comprehensibility (44 per cent) as their top barriers to increasing their sustainable investments.
The authors of the report concluded that access to sustainable investments should be made more available via digital platforms, information should be clearer and more transparent and financial institutions must provide data-led advice on how to match investors’ ESG priorities with the right solutions.
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