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Sustainable investments becoming mainstream
Investors in Malaysia are increasingly interested in sustainable investments due to their desire to help restore the environment and hedge against environmental, social and governance (ESG) risks.
In fact, according to Standard Chartered's Sustainable Banking Report 2022, the top ESG priorities for the Malaysian investors it surveyed are climate change and carbon emissions, pollution and waste management.
"In the past, sustainable investing used to draw interest mainly from wealthy investors who would channel a mix of their philanthropic and investment budgets, with most of the products coming from private markets, which are not easily accessible to most clients," says Sammeer, managing director and head of consumer, private and business banking at Standard Chartered Malaysia.
"Nowadays, sustainable investments are being explored by a much broader spectrum of people, as many more solutions and opportunities that require less entry capital become available in the more accessible public markets."
However, Malaysian investors are still cautious about the short-term volatility of sustainable investment assets in terms of financial performance and risk, according to the survey. They also indicated difficulty in accessing sustainable investments, some of which are only available through technological platforms, and the inability to compare sustainable investment opportunities within the same asset class.
If these challenges are addressed, the potential for growth in sustainable investments is huge. Malaysia alone has a retail sustainable investment potential of US$35 billion by 2030. It is also critical for capital to flow to sustainable investments.
Source: The Edge Markets
"The world must act now if it is to deliver the United Nations Sustainable Development Goals (SDGs) for a more sustainable society by 2030, as there is currently an annual funding gap of US$2.5 trillion. This presents a massive opportunity to channel private capital through sustainable investments to bridge this gap," says Sammeer.
"With interest in sustainable investing at an all-time high, now is the time for investors to make the highest impact through sustainable investments."
Standard Chartered is doing its part by including sustainable investing in its advisory framework and solutions. For instance, it offers multiple sustainable funds for retail investors and has introduced Sustainable Time Deposits, which are used to support the SDGs.
Meanwhile, the Green Mortgage offers preferential rates on financing for residential properties that are certified green. Its self-directed digital investing platform SmartDirect makes sustainable investments widely accessible to investors.
"There is no one – size – fits – all approach as each subset of retail investors requires personalized solutions that are relevant to their life goals, behavior, ESG priorities, motivations, and key barriers," says Sammeer.
The Edge Markets
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