Sustainable investing a crucial strategy for majority of UAE investors

Smart mobility, education, gender equality and healthcare are the top themes for investors in the Emirates, according to research by UBS

A majority of UAE investors expect sustainable investment returns to match or exceed those of traditional investments, the UBS Investor Sentiment survey found. Getty

Investors in the UAE are increasingly seeing benefits from integrating sustainable investing in their portfolio, with 93 per cent saying it is a crucial part of their financial strategy, according to research by Swiss investment bank UBS.

A majority of investors also expect sustainable investment returns to match or exceed those of traditional investments, the UBS Investor Sentiment survey found.

More than 3,000 investors with at least $1 million in investable assets and 1,200 business owners were polled by UBS across 15 markets, including the UAE, Argentina, Brazil, China, the UK and the US.

“Investors continue to remain optimistic about the economy and markets and many plan to increase exposure to risk assets, including a focus on sustainable investments,” Tom Naratil, president of UBS Americas and co-president of UBS Global Wealth Management, said on Tuesday.

“With climate change a top concern for investors, many will focus on the progress made at the UN Climate Change Conference [Cop26] and any agreed new measures.”

Climate change concerns and the Covid-19 pandemic have made people reassess their financial priorities. Investments in assets considered to be responsible from an environmental, social or governance (ESG) perspective continue to grow in popularity.

Globally, the combined assets of sustainable mutual funds grew to $3.9 trillion by the end of September, according to data provider Morningstar. This was boosted by new disclosure rules on sustainable fund flows in Europe, it said.

In September, a survey by Standard Chartered found that 74 per cent of UAE investors want to leave a positive legacy through sustainable investing compared with a global overage of 65 per cent.

Most prefer investments that have a strong, credible story and this is a deciding factor for 70 per cent of UAE respondents when they choose whether to make “impact” investments, the Standard Chartered survey found.

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Smart mobility, education, gender equality and health care were listed as the top themes for sustainable investing among UAE investors, the UBS research found.

“When polled about the stock market, 88 per cent of UAE investors said that they are optimistic about the stock market for the next six months and 35 per cent … are planning to increase their investments in the stock market,” UBS said in the report.

About 77 per cent of respondents in the UAE are also optimistic about their own businesses and 38 per cent are planning to grow their workforce by hiring new candidates, it said.

Seventy-four per cent of business owners in the UAE are offering more flexible working hours, 60 per cent are offering more employee benefits and 66 per cent are offering new or larger end-of-year or spot bonuses to their workforce.

“Throughout the pandemic, business owners faced many workforce challenges and had to adjust to meet the needs of their employees and customers,” said Iqbal Khan, president of UBS Europe, the Middle East and Africa and co-president of UBS Global Wealth Management.

“It is encouraging to see that a majority of business owners remain optimistic and interested in hiring and investing more in their companies over the next 12 months.”

Meanwhile, ESG standards will influence investor property investment and purchasing decisions in the GCC over the next 10 years, according to a new report by Mashreq, the Dubai lender controlled by Al Ghurair family.

“Real estate in the GCC needs to look beyond building just sustainable and energy-efficient buildings – there is a need to deliver spaces that balance health, wellness and technology, too,” Asad Rahman, senior director of real estate finance and advisory at Mashreq, said on Tuesday.

“Inclusion, diversity, work-life balance – these need to play just as much of a role. It is also about the health and well-being of the community and this will play a significant part in investor decisions in the years ahead.”