The $50 Trillion Question: UN Sustainable Development Goals face critical investment shortfall, Standard Chartered research findson 10 Nov 2020
A survey conducted between July and August 2020, amongst a panel of the world’s top 300 investment firms with total assets under management (AUM) of more than USD50 trillion*, found that:
- 20 per cent are unaware of the UN’s Sustainable Development Goals (SDGs)
- Only 13 per cent of their USD50 trillion of investment is linked to the SDGs
- 64 per cent of their AUM is invested in Europe and North America, with only 5 per cent in Middle East and Africa combined, even though investors say emerging-market investments outperform
- Lack of investment in emerging markets puts the chances of meeting the 2030 SDG deadline at risk
NEW YORK, November 9, 2020 – The UN Sustainable Development Goals (SDGs) are not getting the investment needed to help the world meet critical targets for combatting challenges such as poverty and climate change by 2030, new research from Standard Chartered has revealed.
The $50 Trillion Question investigates how some of the world’s largest asset managers – with a combined USD50 trillion in assets under management (AUM) – are investing at this critical time for the global economy and the environment.
Not enough investment is linked to the SDGs
The research points to a growing focus on sustainability, with 81 per cent of investment firms now taking a disciplined approach to environmental, social and governance investment. However, this is not translating into investment in the SDGs. Only 13 per cent of the assets managed by our respondents is directed towards SDG-linked investments.
Some 55 per cent claim the SDGs are not relevant to mainstream investment and 47 per cent say investment in the SDGs is too difficult to measure. However, one fifth of investors admit that they were not aware of the SDGs.
|What are the main barriers to benchmarking investments against the SDGs?|
|The SDGs are not relevant to mainstream investment||55%|
|We plan to start measuring investments against the SDGs but haven’t achieved that yet||50%|
|Investment in the SDGs is too difficult to measure||47%|
|The SDGs aren’t relevant to how we assess our investments||47%|
|We don’t make investments that contribute to the SDGs||66%|
Respondents point to regulatory changes, favourable tax treatment, evidence of higher returns, better data for measuring impact, and increased demand from retail investors as the top five factors that might spur on more SDG investment.
|What are the tools and incentives to encourage SDG investment?|
|Regulation that encourages SDG-linked products||74%|
|Favourable tax treatment of SDG-linked investments||63%|
|More evidence that investing in SDGs will not lead to underperformance||63%|
|Better data to measure the impact of SDG investments||53%|
|Retail investor demand for SDG-themed investments||53%|
Emerging markets are seeing a massive shortfall in investment
Our research shows that almost two thirds (64 per cent) of AUM are invested in the developed markets of Europe and North America. Asia, which includes a number of developed markets, takes 22 per cent, while just 2 per cent, 3 per cent and 5 per cent of the assets are invested in the Middle East, Africa and South America, respectively.
This contrasts with 88 per cent of investors saying that investments in emerging markets have matched or outperformed developed markets over the past three years.
The perceived risk posed by emerging markets is a major barrier to investment. More than two-thirds of investors believe emerging markets are high-risk, compared to 42 per cent who believe the same for developed markets
Meanwhile, COVID-19 may have made it even harder for emerging markets to get the investment they need. Some 70 per cent of investors believe the pandemic has widened the capital gap further.
|Which markets are getting the most investment?|
Simon Cooper, CEO, Corporate, Commercial and Institutional Banking, Standard Chartered said, “Much progress has been made in recent years to realise the SDGs, but this study makes clear the need to move faster. A seismic, unprecedented surge in private-sector investment – alongside public investment and commitments – will be required to bridge the gap and hit the 2030 SDG targets.
“There is no single answer to The $50 Trillion Question, but it is evident that investors need to expand their focus beyond developed markets if we are to achieve these goals. Emerging economies offer investors a unique opportunity: strong returns combined with the chance to have a significant, positive impact. Now is the time to seize it.”
The $50 Trillion Question study follows the publication of Opportunity2030: The Standard Chartered SDG Investment Map which first revealed the multi trillion-dollar opportunity for private-sector investors to help achieve the SDGs in emerging markets.
You can read the full Standard Chartered $50 Trillion Question report here.
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Notes to editors:
*The $50 Trillion Question Investor Panel is made up of asset managers from the world’s top 300 asset management companies. With combined assets under management (AUM) worth more than USD50 trillion (the equivalent to half of global GDP), how the asset managers in our survey choose to invest will have a huge impact on humanity’s ability to solve some of the world’s biggest problems. This study is based on in-depth interviews with the panel, conducted between July and August 2020.
The below shows the panel broken down by AUM, role and location, all of which ensure it is representative of the global top 300 asset managers.
|The $50 Trillion Investor Panel|
|by AUM||by generalised job role||by location|
|19 per cent are top 10 firms (over USD1 trillion) 46 per cent are top 11-50 Firms (USD1 trillion to USD350 billion) 23 per cent are top 51-150 firms (USD350 billion to USD90 billion) 12 per cent are top 151-300 firms (USD90 billion to USD20 billion)||42 per cent are fund managers 41 per cent are strategists 17 per cent are emerging market specialists||42 per cent are based in North America 42 per cent are based in Europe 8 per cent are based in Japan 3 per cent are based in China 5 per cent are based elsewhere|
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