- Retail investors could be the key to unlocking finance for ESG priorities if barriers are addressed
- Investors in Mainland China and India have the potential to channel nearly USD7 trillion towards top ESG priorities including the climate transition
Singapore, London – Standard Chartered’s Sustainable Banking Report 2022: Mobilising retail investor capital has found that USD8.2 trillion of investable retail wealth could be channelled into sustainable investments by 2030 to finance ESG objectives in growth markets.
This capital could play a critical part in bridging funding gaps in areas including energy, food security, poverty alleviation as well as helping to fund the transition to global net zero carbon.
The new research by Standard Chartered identifies the potential for retail capital mobilisation across 10 growth markets, highlights barriers faced by currently faced by investors, and provides solutions to expand sustainable investing into a mainstream asset class.
Mobilising investor capital to finance the climate transition in growth markets
According to the research, 40% of retail investors across all markets and income brackets consider climate change and carbon emissions a top investment priority.
Research shows that Mainland China and India have the highest potential for growth in sustainable investing, largely due to their sizeable populations and rising domestic wealth. Mainland China alone could mobilise USD5.7 trillion in sustainable retail investment by 2030. Across Mainland China and India, 42% and 40% of investors respectively want to put their money towards addressing climate issues. Investors in South Korea, Taiwan, Malaysia, Kenya and Nigeria also have a significant opportunity to make a positive impact if they are given the opportunity to reallocate funds towards sustainable projects. Investors in established financial hubs such as Hong Kong, Singapore and the United Arab Emirates can also play a key role because they have the infrastructure to ramp up the availability of sustainable investments.
Investors in Kenya and Nigeria could mobilise USD19 billion and USD198 billion respectively through sustainable investments by 2030. Climate change is again one of the top ESG priorities for investors in these markets, signalling the potential to harness their capital towards transition finance.
Investor barriers need to be overcome to unlock USD8.2 trillion
The report further highlights the need for climate-themed investment solutions to be made more widely available to translate this investor interest into actual impact.
Across the 10 markets surveyed, retail investors identified the following as their top barriers to increasing their sustainable investments:
- Accessibility (48%): Investors find access to sustainable investment products difficult or limited
- Perceived low returns/higher risks (47%): Almost half have the misconception that sustainable investments underperform against traditional asset classes
- Understanding (47%): Lack of information and detail to help them understand the impact of sustainable investment
These findings demonstrate how financial institutions can play a critical role in unlocking available capital by breaking down these barriers for retail investors, using analysis based on investor behaviour and motivations.
The report shows the need for clear action to:
- Democratise access to sustainable investments by making more solutions available in more markets via digital platforms
- Provide clear and transparent information
- Address investor apprehensions and provide data-led advice on how to match their ESG priorities with the right solutions
Marc Van de Walle, Global Head, Wealth Management, said: “Individuals have the power to be catalysts for change. Our research shows that USD8.2 trillion of retail investor wealth could flow into sustainable investments if we remove the barriers that are holding them back. The top ESG-related issues across the 10 markets we surveyed – climate change, pollution, poverty, corruption, food scarcity and energy security – correspond to the areas that investors are most interested in addressing. We know that a rapidly growing number of our clients want their investments to make a positive impact on the environment and in society, and there is significant appetite to take ESG investment from a niche play to a mainstream investment strategy. As a bank, we have the expertise and solutions to help investors achieve both profit and purpose. Importantly, we need to enable the shift now for a more sustainable future.”
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About Sustainable Banking Report 2022: Mobilising retail investor capital
This report, commissioned by Standard Chartered and prepared by PwC Singapore, provides a view on the potential retail wealth that could potentially be channelled into sustainable investments by 2030, and identified covers 10 growth markets, five investor personas as well as three winning themes that would be key in unlocking this potential. The study is based on an analysis of qualitative and quantitative information from various sources, including historical and forecasted net personal wealth and GDP data, as well as sustainable investment adoption rate in advanced economies to form an estimation of the 2030 retail sustainable investment potential across the 10 growth markets. All forward-looking retail sustainable investment figures included in this report are meant to communicate the potential of retail investors in these given markets only and does not constitute a projection nor forecast.
A survey among 3113 individuals – across 10 markets and three investor segments – was conducted to understand retail investors’ behaviour traits, interests in, motivations of and barriers towards sustainable investments. The report also highlights how these dimensions varied between markets and investor segments, providing valuable insights and granularities. A non-exhaustive list of five personas were also constructed based on different life stages and life goals, to better understand the unique motivations and challenges retail investors face in sustainable investing and outlined targeted solutions to help investors overcome their key barriers and expand sustainable investments into a mainstream asset class.
Find out more here.