Malaysian retail investors have the potential to channel US$35 billion (US$1=RM4.71) towards top environmental, social, and governance (ESG) priorities, particularly the financing of climate transition by 2030, according to Standard Chartered.
Its “Sustainable Banking Report 2022: Mobilising retail investor capital” found that US$8.2 trillion of investable retail wealth could be channeled into sustainable investments by 2030 to finance ESG objectives in 10 growth markets across Asia, Africa and the Middle East.
These markets are mainland China, Hong Kong, Taiwan, South Korea, Singapore, Malaysia, India and the United Arab Emirates, Nigeria and Kenya.
In a statement today, Standard Chartered Malaysia said this capital could also play a critical part in bridging funding gaps in Malaysia’s other ESG priorities such as pollution and waste management.
According to the research, Malaysia has high potential for growth in sustainable investing, largely due to its significant population and rising domestic wealth. Across the country, 36 per cent of investors want to put their money towards addressing climate issues.
“Greater access and transparency in the sustainable investment ecosystem could mobilise Malaysia’s retail capital potential in reaching its carbon neutrality targets, aside from other ESG issues of concern to retail investors, such as pollution, waste management and energy security,” it noted.
The report further highlighted investor needs and market-specific barriers that must be overcome to translate this investor interest into actual impact. The top barriers include perceived low returns/higher risk (53 per cent), accessibility (51 per cent) and comparability (45 per cent).
“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 bank said.
The report showed the need for clear action to democratise access to sustainable investments by making more solutions available in more markets via digital platforms, providing clear and transparent information, addressing investor apprehensions, and providing data-led advice on how to match their ESG priorities with the right solutions.
Standard Chartered Malaysia Managing Director and Head of Consumer, Private, and Business Banking, Sammeer Sharma, said individuals have the power to be catalysts for change.
“Our research shows that 72 per cent and 86 per cent of affluent and high net worth investors respectively in Malaysia have a high level of interest in sustainable investments, motivated by their desire to help restore the environment and hedge against ESG risks.
“The synergies between Shariah-compliant investing and sustainable investments also present an opportunity to channel private capital towards sustainable investments,” he said.
He noted a rapidly growing number of the banks’ 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,” he added.