SINGAPORE - More Singapore investors are showing interest in sustainable investments, but it is crucial to address and overcome key barriers towards sustainable investing to increase uptake of such investments.
Standard Chartered Bank's latest survey found that 37 per cent of respondents expect to have more than 15 per cent of sustainable assets as part of their investment portfolio in the next two to three years - up from the current 24 per cent of investors.
However, low adoption rates suggest there is an untapped opportunity for more to direct their investment dollars towards sustainable investments, said the banking group in a statement on Tuesday.
According to its Sustainable Banking Report 2022, Singapore has a potential retail investor capital of US$91 billion (S$130.7 billion) that could be mobilised towards top environmental, social, and corporate governance (ESG) priorities, particularly the financing of the climate transition.
The survey involved 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.
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.
The top ESG priorities for investors in Singapore include climate change and carbon emissions (46 per cent), food and water scarcity (31 per cent) and pollution and waste management (24 per cent).
"Unlike conventional banking products, sustainable banking products can combine cost benefits with social responsibility or environmental sustainability. Interest in sustainable ESG funds has gone up - the bank has seen a four-fold increase in assets under management (AUM) since the beginning of last year," said StanChart.
The top barriers for investors in Singapore are perceived low returns or higher risk (49 per cent), comparability (48 per cent), indicating that it is difficult to compare sustainable investment opportunities within the same asset class, as well as comprehensibility (47 per cent), which refers to concerns over too little information to help them understand and assess the impact of sustainable investments on ESG issues.
Sustainable investing needs to be made relevant in order to bolster interest and improve adoption, said Mr Eugene Puar, regional head of wealth management for Asean and South Asia, and head of wealth management (Singapore) at StanChart.
"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," said Mr Puar.