Singapore has the potential to unlock USD 91 billion of retail capital to address ESG issues by 2030
Standard Chartered’s new sustainable survey suggests that retail investors could be the key to unlocking finance for ESG priorities if barriers towards sustainable investments are addressed.
More Singaporean investors are showing interest in sustainable investments, with 37 per cent of survey respondents expected to have more than 15 per cent of sustainable assets as part of their investment portfolio in the next two to three years. This is up from the current 24 per cent of investors.
However, lower adoption rates (46 per cent) suggest that there is an untapped opportunity for more to direct their investment dollars towards sustainable investments. According to Standard Chartered’s latest Sustainable Banking Report 2022, Singapore has a potential retail investor capital of USD 91 billion that could be mobilised towards top ESG priorities, particularly the financing of the climate transition. This is in line with the government’s sustainability agenda to accelerate its net zero transition.
More than 3,000 emerging affluent, affluent, and high net worth investors across 10 key growth markets – Hong Kong, India, Kenya, Mainland China, Malaysia, Nigeria, Singapore, South Korea, Taiwan, and the United Arab Emirates, were surveyed for this report. The report identifies the potential for retail capital mobilisation across these markets, highlights barriers faced by investors and offers solutions to expand sustainable investing into a mainstream asset class.
Mobilising investor capital to finance the climate transition
With rising domestic wealth and net personal wealth, Singapore has a high potential for growth in sustainable investments. Coupled with a well-developed financial market infrastructure and government support, there is also a burgeoning interest in the ecosystem of sustainable banking products, such as sustainable deposits credit cards and investment products, as well as green mortgages.
Unlike conventional banking products, sustainable banking products can combine cost benefits with social responsibility or environmental sustainability. Interests in sustainable ESG funds has gone up; the Bank has seen a four-fold increase in AUM since the beginning of last year.
Apart from wanting to make a positive social impact (33 per cent), and help the environment (32 per cent), they are motivated primarily by their drive to enhance financial returns (35 per cent).
The top ESG priorities for investors in Singapore include:
- Climate change and carbon emissions (46 per cent)
- Food and water scarcity (31 per cent)
- Pollution and waste management (24 per cent)
Investor barriers to overcome to unlock USD91 billion
To fully capitalise on investors’ interest and turn it into actual impact, it is crucial to address and overcome key barriers towards sustainable investing. These are the top barriers for investors in Singapore:
- Perceived low returns/higher risk (49 per cent)
- Comparability (48 per cent)
- Comprehensibility (47 per cent)
Eugene Puar, Regional Head of Wealth Management, ASEAN and South Asia and Head of Wealth Management, Singapore, Standard Chartered Bank, said: “We recognise that sustainable investing needs to be made relevant in order to bolster interest and improve adoption. As such, we play an essential role in providing personalised sustainable solutions that encourage our clients to channel their capital towards positive impact and returns. By addressing investors’ concerns with professional advice and education, we remove barriers so investors can make more informed choices that will achieve both financial returns and purpose. Ultimately, investors must feel empowered to be catalysts of change and mobilise their wealth to address one of the greatest challenges of this generation. With that, I am confident that sustainable investing will become a mainstay in investors’ portfolio.”