UAE on upward trajectory for sustainable investing but adoption lower than global, Standard Chartered

Standard Chartered’s latest survey, the Sustainable Investing Review 2021, shows that there is a heightened desire to leave a positive legacy in the UAE in the area of sustainable investing, with 74% of investors in the UAE reporting this is important compared to 65% overall.

The majority of UAE investors prefer investments that have a strong, credible story, with this being a pivotal factor for 70% of UAE respondents compared to 58% overall. The key to reaching the tipping point for sustainable investments in the UAE could lie in financial institutions sharing compelling stories that highlight the positive social and environmental outcomes for the next generation.

The UAE is on an upward trajectory when it comes to sustainable investing but its adoption rate of 57% is slightly lower than the global average of 61%. However, given 74% express a desire to leave a positive legacy, compared to the global average of 65%, the UAE could overtake other markets in terms of adoption going forward.

At the same time, the survey finds that 56% of investors in the UAE are apprehensive about sustainable investments compared to 51% overall, with 78% believing it is possible to do good and make money at the same time, compared to 75% overall.

In the UAE, the research identified trends across a four-stage adoption cycle:

• Awareness – 88% of UAE respondents know what suitable investing is
• Interest – 80% show interest in sustainable investing
• Intention – 40% of those who have not yet invested in sustainable solutions plan to in the future
• Adoption – 57% have placed funds in a sustainable investment solution

Investors in the UAE shared a number of apprehensions that are holding them back from taking action, crossing over from the stages of awareness, interest and intention to actual adoption:

• Transparency of the impact of sustainable investing: 69% of investors need quantitative evidence to be convinced an investment had a social impact
• Financial performance: 47% of investors have concerns about the financial performance of sustainable investments
• The direct donation alternative: 43% believe donations can achieve a more immediate social outcome

The Sustainable Investing Review 2021 gauged sustainable investing trends among the emerging affluent, affluent, and high net worth investors and revealed that sustainable investing is at a tipping point, with awareness and interest at an all-time high. However, investor apprehensions – lack of measurement and transparency topping the list – are preventing sustainable investing from becoming more mainstream.

The survey revealed an upward trend in sustainable investing among more than 2,000 investors, representing USD11 Billion in AUM, surveyed in Mainland China, Hong Kong, Taiwan, Singapore, India, the UAE and UK. Overall, the allocation of sustainable investments in investor portfolios is on the rise: 13% of investors already have more than 25% of total investments channelled into sustainable solutions, compared to just 2% of investors in 2020.

Dr Owen Young, Managing Director, Regional Head of Wealth Management for Africa, Middle East and Europe at Standard Chartered Bank said, “Our findings show that interest for sustainable investments in the UAE, and across international markets, is at an all-time high, signalling a valuable opportunity to address global climate change and environmental concerns through financial means. Although investor interest in these investments has been confirmed, it is the responsibility of corporates to provide a compelling sustainability narrative that truly emphasises the positive impact of their operations on global environmental, social, and governance objectives, with an overwhelming 70% of UAE investors preferring investments that showcase robust sustainability stories. Alongside Standard Chartered’s deep commitment to provide sustainable financing solutions, we also look to play a driving role in advocating for greater capital formation and channelling towards sustainable corporates and projects.”