Thu, Jul 16, 2020

Business, Banking & Finance
HNWs in UAE keen on green investments

Affluent and high-net-worth (HNW) investors in the UAE are still keen on green and sustainable investments amidst Covid-19 pandemic, finds a survey.

Standard Chartered Private Bank’s Sustainable Investing Review 2020 highlights the resilience of investor interest in sustainable investments amidst market disruptions due to Covid-19.

As many as 90 per cent of investors surveyed said they are interested in sustainable investments, with 42 per cent planning to invest 5 to 15 per cent of their funds in sustainable investments over the next three years.

Affluent and HNW investors in the UAE, which has the highest number of affluent investors and whose wealth is largely salary-based, are keen to capitalise on green and sustainable opportunities. Here, 72 per cent of potential investors indicated they are highly interested in the possibilities presented by sustainable investing. This interest was matched by 39 per cent of UAE investors expressing an interest in allocating 15 to 25 per cent of their funds to sustainable investments within the next three years, the survey says.

The private bank’s third annual survey covered around 1,000 investors with a specific focus on affluent and high net worth (HNW) investors in Hong Kong, Singapore, the UAE and the UK.

Investors’ SDG priorities

The effect of the pandemic is clearly reflected in this year’s findings which highlighted investors’ focus on areas that build resilience against future crises. Nearly 50 per cent rated the United Nations (UN) Sustainable Development Goals (SDGs) of Clean Water and Sanitation and Good Health and Well-being as being of higher importance. This is followed by 43 per cent of investors indicating Climate Action as more important, which edged ahead of Quality Education and Zero Hunger, both at 40 per cent.

The survey reveals that investors in the UAE also had a higher degree of apprehension compared to Asian investors, as well as a need for increased knowledge about terminology, for instance, UAE investors were the least familiar with low carbon investing.

Facilitating interests and removing barriers

Consistent with previous studies, this year’s survey shows that investors lack knowledge about how to meet social and impact goals that are of interest to them. This continues to impede investors who want to make sustainable investments. Banks play a critical role in providing essential guidance to clients to unlock the growing momentum for sustainable investing. Besides the lack of knowledge, the other top barriers to investment in this segment are apprehension, and lack of motivation and advice.

Personality influences investment approach

The survey identifies five investor personality types – Optimisers, Impact Believers, Cautious, Resistant and Apathetic – that influence sustainable investing decisions. Of these, the Impact Believers stand out with their high interest in sustainable investing and low apprehension towards such investments. In the UAE, which has the highest number of affluent investors and whose wealth is largely salary-based, Optimisers and Cautious are equally common.

This finding is consistent with our earlier Investor Personality Study 2020 which underpins our approach to serving clients. By identifying the needs of individual investors based on their personality type, we can offer customised advice to help clients achieve better investment outcomes and avoid pitfalls, particularly during times of market uncertainty.

Investor interests vary across geographies

The report also highlights differences among investors across geographies, reinforcing how cultural nuances and local market experiences, among others, can influence investor personalities and their corresponding investment approaches.

An interesting nuance shows up in preferences for SDGs among the affluent and HNW investors. While this group of investors shows little distinct preferences for any SDGs, small relative spikes of specific interest is observed with Good health and well-being and Climate Action edging above the others.

Investors from different regions, have differing views on which of the SDGs are of higher importance, for instance, those in Hong Kong favour Climate Action and those in the UAE care more about Quality Education.

In relation to investors’ consideration for further investments, the report reveals that affluent and HNW investors are generally willing to consider allocating funds towards sustainable investments, regardless of whether they have previous experience in making such investments.

“Naushid Mithani, Head of Global South Asian Community, Europe, Middle East and Africa and Private Bank Head UAE, Standard Chartered, said: “While interest in sustainable investing continues to grow in the UAE, there is more scope for enhancing the knowledge and participation in sustainable finance among the affluent and the high net worth individuals. Those already invested in sustainable investments were also most likely to continue to increase their wallet share.

“As an international bank deeply rooted in the UAE, we have a critical role to play in supporting to increase knowledge, participate and facilitate our clients’ sustainable investing journey and ambitions. Knowing how clients’ investor personalities influence their investment approach allows us to help unlock any barriers. This is where our Impact Philosophy is useful in giving clients a structured framework to identify environmental and social causes that matter to them, as well as to understand the risks and returns of potential opportunities.”

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