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Retail investors in the UAE can mobilise more than Dh367 billion ($100bn) towards top environmental, social and governance (ESG) priorities, particularly the financing of climate transition to net zero, a report by Standard Chartered has found.
This capital could play a critical part in bridging funding gaps in the UAE’s other ESG priorities, including food and water security and pollution and waste management, said the report, which surveyed 3,113 people across 10 markets.
More than 40 per cent of investors in the Emirates want to put their money towards addressing climate issues, the research found.
“Our global research reveals a significant amount of retail investor wealth which can flow into sustainable investment should the investment barriers be overcome,” said Owen Young, head of affluent and wealth management for Africa, Middle East and Europe at Standard Chartered Bank.
“There is significant appetite in the UAE to take ESG investment from a niche play to a mainstream investment strategy.”
The UAE is aggressively pursuing goals to reduce its carbon footprint and became the first country in the Middle East to set a net-zero target last year. The Emirates aims to achieve carbon neutrality by 2050 and plans to invest $160bn on clean and renewable energy sources over the next three decades.
The Emirates will require Dh2.5 trillion in investment to finance its transition to a net-zero economy, according to an April report by Standard Chartered.
Private investors can contribute more than Dh300tn of the Dh350tn that is required by emerging markets for the energy transition, the bank said.
About 38 per cent of investors in the UAE cited climate change and carbon emissions as their top ESG priority, followed by 31 per cent who referred to energy and resource use and 26 per cent who picked pollution and waste management, the latest Standard Chartered report found.
However, barriers need to be overcome to unlock more than Dh411bn to translate this investor interest into actual impact, the report said.
Forty-seven per cent of UAE-based investors picked comparability as the top barrier to increasing their sustainable investments, while 45 per cent cited perceived low returns and higher risk, and 44 per cent highlighted comprehensibility, according to the research.
Financial institutions must democratise access to sustainable investments by making more solutions available via digital platforms, the report suggested. They must also provide transparent information, address investor apprehensions and provide data-led advice on how to match investors’ ESG priorities with the right solutions, the lender said.
Meanwhile, more than Dh30tn of investable retail wealth can be channelled into sustainable investments by 2030 to finance ESG objectives in 10 growth markets, the research found.