Standard Chartered’s latest Sustainable Banking Report 2023 reveals USD40 billion of retail investor capital could be mobilised towards climate investments in the UAE by 2030.
The research – based on investor interest from a survey of 1,800 respondents in 10 growth markets across Asia, Africa and the Middle East – identifies a global potential of USD3.4 trillion for climate investing, highlighting the power of individuals to combat climate change.
Within climate investing in the UAE, USD23 billion could flow into mitigation themes – energy storage, energy efficiency and renewables are set to attract the most capital. USD17 billion could be mobilised towards adaptation including resilient infrastructure, food systems and the blue economy.
The survey shows 93% of investors in the UAE are interested in climate investing, and 87% of them want to increase capital flows towards climate. They are mainly motivated by making a positive impact and personal values when making such investments.
However, multiple barriers, which vary by investor segments, are holding them back from translating their interest into investment.
|
Investor segment |
Barriers to mitigation investment |
Barriers to adaptation investment |
|
Affluent |
Accessibility (75%) |
Comparability (72%) |
|
High-Net-Worth (HNW) |
Accessibility (77%) |
Comprehensibility (79%) |
|
Next Generation HNW |
Accessibility (81%) |
Perceived low returns (72%) |
The industry needs to help investors overcome these barriers to unlock the potential of retail capital. Financial institutions, regulators, companies and individuals must make a concerted effort to establish a wider range of climate assets to drive greater retail participation.
Asset managers and banks must also work to innovate new climate assets to match emerging investor interests, such as biodiversity and the blue economy. Financial institutions have a critical role to play in mobilising retail capital via three pillars – empowering investors with information, product customisation and outcome-based information. Digital and fintech solutions will play an enabling role and simplify processes for investors.
The industry across the world also needs to align reporting standards and mandate minimum disclosure requirements to boost investor confidence.
Rola Abu Manneh, Chief Executive Officer, Standard Chartered, UAE, said: “As the host of the Conference of the Parties on Climate Change (COP28) and the first country in the Middle East to pledge to achieve Net Zero by 2050, the UAE can lead the region in combating climate change, especially since it is characterized by a favourable regulatory environment that helps in the growth of businesses and economic sectors. This constitutes an attractive point for global financial institutions that aim to develop financial products and solutions dedicated to confronting climate change. Recognising this opportunity, Standard Chartered collaborates closely with institutional and individual clients across the country to strategically align their businesses and investments to their areas of interest, especially those related to sustainability, therefore empowering our clients to actively contribute to the nations’ Net Zero goals.”
