Sustainable investing key to a better future, but hurdles remain, finds study

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The Dubai Sustainable City. In the UAE, 69% of respondents agreed that governments and companies who choose not to invest with ESG in mind will be left behind. Image Credit: Gulf News Archives

A significant number of people in the UAE place sustainable investing at a high priority, and expect the trend to continue until at least 2030 across both public and private sectors, a new study shows, even though the initiative will face several barriers.

The Sustainable Future Study, conducted by Bloomberg Media and sponsored by Mubadala Investment Company, found 79 per cent of global business decision makers stress on sustainable investing, with the figure rising to 86 per cent in the UAE.

The study, which polled respondents from the UK, China, France, the US and the UAE, 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 per cent of respondents agreed that governments and companies who choose not to invest with ESG in mind will be left behind.

Globally, 86 per cent of all respondents feel that investing is a powerful driver of a more sustainable future while over half (55 per cent) 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, the report found that 85 per cent 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 per cent 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 recognising 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 per cent of respondents, followed by high fees and a lack of experts at 33 per cent and 32 per cent respectively. In the UAE, the barriers are weighted differently, with liquidity (46 per cent) and performance (39 per cent) cited as the highest challenges.