UAE investor interest in sustainable investing grows in 2020

7 in 10 investors are willing to give up returns in exchange for meeting ESG investment goals, new survey finds

Eight in 10 investment professionals surveyed globally said they take ESG themes into account when investing, up from 73 per cent three years ago. This has been driven by client demand. Getty Images

Around 94 per cent of retail investors in the UAE are interested in or have already invested in environmental, social, and governance (ESG) themes in 2020, up from 90 per cent in 2018, according to a new survey by CFA Institute.

More than 7,000 clients and ESG specialists were polled in the survey, which also found that 74 per cent of UAE investors are willing to give up some return in exchange for meeting their investment goals.

“As the Middle East’s second-largest economy, the UAE has shown an increasing appetite towards sustainable investment opportunities, as part of the country’s long-term vision,” said William Tohme, senior regional head of Mena at the CFA Institute, a global association of investment professionals.

"Amid market disruptions due to Covid-19, retail investors in the UAE are most focused on improved returns in all markets," he added.

"Also, when surveying female investors, women were more likely than men to prefer higher returns [76 per cent versus 67 per cent] to risk mitigation [24 per cent versus 33 per cent], in contrast to the commonly held perception that women are more risk averse as investors.”

The research also found that 85 per cent of investment professionals surveyed globally said they take E, S and/or G themes into account when investing, up from 73 per cent three years ago. The shift was driven by client demand, with 69 per cent of retail investors and 76 per cent of institutional investors having interest in ESG investing, the survey said.

In a world currently dominated by Covid-19, ESG funds have been boosted by record capital flows in 2020.

ESG funds in the US, for example, have so far this year attracted $10.4 billion, according to a Morningstar report. This brings the tally for the first half of the year to $20.9bn, nearly matching the $21.4bn that investors ploughed in sustainable funds in the entire year of 2019.

"As the focus on sustainability in investing gathers increasing momentum, it will eventually dictate the sustainability of investing itself,” Margaret Franklin, the president and chief executive of the CFA Institute, said.