Sustainable Investing essential to Value Creation, but barriers remain finds Mubadala-sponsored Study
Research says ESG ‘integral’ part of investment decision-making worldwide with trend only growing in the future
- Globally 79 percent of all respondents place sustainable investing as high priority today, 86 percent in the United Arab Emirates
- 86 percent believe that investing is a powerful driver of a more sustainable future
- 85 percent believe that investing with Environment, Social and Governance (ESG) considerations will improve overall returns, suggesting the growing interrelationship between generating profit and impact
- However, challenges to sustainable investing exist with a lack of defined standards ranks the top barrier overall
Abu Dhabi (UAE):
Sustainable investing is a high priority today and will continue to be in 2030 across the private and public sectors, but it faces various barriers, according to a study conducted by Bloomberg Media. The report, launched today and sponsored by Mubadala Investment Company, found 79 percent of respondents globally place sustainable investing as a high priority with that figure rising to 86 percent in the United Arab Emirates.
The Sustainable Future Study polled over 800 global business decision makers from the UK, China, France, the US and the UAE. It examines the Environment, Social and Governance (ESG) investment landscape and where it is heading by the end of the decade. It shows that ESG is no longer a ‘nice-to-do’, but an integral part of investment decision making, driving a sustainable future, shareholder value, and overall returns. In the UAE 69 percent of respondents agreed that governments and companies who choose not to invest with ESG in mind will be left behind.
Globally, 86 percent of all respondents feel that investing is a powerful driver of a more sustainable future while over half (55 percent) see the Environmental aspect in ESG contributing the most to a company’s shareholder value.
In contrast to a common view that ESG inhibits value creation, this report finds that 85 percent believe that investing with ESG in mind will improve overall returns, suggesting its growing importance for investment decision making and the interrelationship between profit and impact. This is clearly a key motivating factor for investment, with half of respondents in China weighing ESG factors in investment decisions due to higher returns; two in five UAE respondents are motivated in the same way. More than half in France and 46 percent in the UK, however, believe the greatest benefit of ESG investing is that it presents greater opportunity for disruptive change.
Ahmed Saeed Al Calily, Chief Strategy and Risk Officer, Mubadala said “More and more investors are recognizing the integral role responsible investment is contributing to a sustainable future, shareholder value and returns. As a business, we strongly believe that generating financial returns and delivering a positive impact are not mutually exclusive but can powerfully combine to create tangible and lasting change.”
Despite the endorsement for ESG from respondents, the report identifies key barriers to considering ESG in investment decisions with a lack of defined standards cited as the top barrier by 35 percent of respondents, followed by high fees and a lack of experts at 33 percent and 32 percent respectively. In the UAE, the barriers are weighted differently, with liquidity (46 percent) and performance (39 percent) cited as the highest challenges.
Al Calily added: “While there’s growing appetite for sustainable investments, ESG’s potential can only be fully realized with more standardization. There is a clear need for greater coordination between the public and private sectors across the world to drive harmonization. This will help with comparative analysis, investment screening and decision making, and help drive investments in global solutions.”
The report also explores investment areas and allocations, finding that Renewables and Clean Energy are the most favored at 39 percent, followed at a distance by waste reduction and financial services.
To read the full report, click https://sponsored.bloomberg.com/article/mubadala/the-future-of-esg-Investing