Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner.

Standard Chartered shows how to motivate retail investors to finance the climate transition in growth markets

© ShutterstockPost Thumbnail

Standard Chartered’s (LON:STAN) survey of retail investors across key growth markets found that $8.2 trillion in retail wealth can be directed to sustainable investing by overcoming barriers relating to understanding, access and risk/return in the space.

  • Standard Chartered’s 2022 sustainable banking report found that 40% of retail investors surveyed prioritise investing in climate change and carbon emissions.
  • Barriers to sustainable investing cited by nearly half of those surveyed include access to investment products, poor understanding of investment impacts, and a misconception about related risk/return rewards.
  • Improved access to products, data and advice, and providing solutions that match investor ESG preferences could unleash $8.2 trillion in retail wealth towards sustainable investing.

The sustainable banking report provided granular insights into the motivations and inclinations of retail investors in ten major growth markets across Asia, Africa and the Middle East.

Improving access to data, and providing tailored solutions could help mobilise vast amounts of retail investor capital, especially in countries like China and India, but should be accompanied by sound regulatory oversight.

Sustainable banking report 2022: mobilising retail investor capital

The report prepared by PwC Singapore for Standard Chartered was based on a survey of retail investors across ten growth markets, designed to help the bank develop solutions to make sustainable investments a mainstream asset class by 2030.

The survey covered 3,113 individuals in China, India, South Korea, Taiwan, Malaysia, Kenya, Nigeria, Hong Kong, Singapore and the United Arab Emirates (UAE). Top ESG issues identified were climate change, pollution, poverty, corruption, food scarcity and energy security.

Detailed social and behavioural investor traits gleaned across the demographic data gathered was designed to help STAN construct investor profiles to better understand the motivations and challenges faced by retail investors in these markets.

Large investment potential comes with surmountable challenges

Based on the survey conducted by PwC on behalf of STAN, 40% of retail investors across the markets identified, and across various income and socioeconomic groups, considered climate change and carbon emissions reduction a top investment priority.

Rising domestic wealth and the size of their populations made China and India the markets with the highest potential for growth. China alone has the potential to direct $5.7 trillion in retail sustainable investment by 2030, the survey found.

Superior financial infrastructure in established financial hubs like Hong Kong, Singapore and the UAE suggested retail investors had the potential to increase their allocations to sustainable investing as well.

Directing capital towards transition finance could mobilise Kenya’s $19 billion, and Nigeria’s $198 billion in retail wealth, with climate change being a top investment priority there.

Barriers identified by the survey also provided insight into the solutions needed to address investor’s sustainability demand in growth markets. Almost half (47-48%) of the respondents identified accessibility, perceived low returns or high risk, and a lack of understanding as reasons for slow adoption of sustainable investing.

Solutions needed would have to make more solutions available across the market, and preferably on digital platforms, which can provide speedy access, while also enhancing transparency. Advisory services was also a key requirement identified by the survey.

New solutions must not overlook regulatory oversight

The attractiveness of directing retail investment towards sustainable investing in countries in Africa, Asia and the Middle East is that it could help bridge funding gaps in sustainable development in-country and regionally.

However,  care must be taken to provide suitability and regulatory oversight to protect individuals. Additionally, investments must be scrutinised to guard against claims of greenwashing, which can result in products losing their ESG ratings.

Even though suitability has been well established in retail investing in the developed world, and is now part of the new MiFID II requirement in Europe, a recent survey found that many wealth managers in Europe were not addressing their clients ESG preferences.


More from SG Voice

Latest Posts