Dubai: High net worth investors from the UAE are keen on committing more resources to sustainable investments, according a recent study done by Investor Watch report by UBS Global Wealth Management.
The study conducted among more than 5,300 millionaires across 10 markets such as Brazil, China, Germany, Hong Kong, Italy, Singapore, Switzerland, UAE, United Kingdom and United States with at least $1 million in investable assets (excluding property), found that the highest rates of adoption in sustainable investing was found in the UAE.
From a sample size of 408 investors in the UAE, the study found a vast majority (93 per cent) of UAE investors believe they are not giving up investment performance by choosing a sustainable investment, in contrast to a global average of 82 per cent. Further, 66 per cent of UAE investors expect sustainable investments to outperform traditional investments, compared to 50 per cent of investors surveyed globally.
“The results show that UAE investors are ahead of many of their peers in Europe and Asia when it comes to investing sustainably. They do not believe they are sacrificing returns. Rather, they feel that the steps many are now taking will become normal practice in the future. The priority in the medium term will be for them to continue feeling able to align their personal priorities with their investment needs,” said Niels Zilkens, head of Wealth Management Arabian Gulf and NRI at UBS
The study showed that UAE investors expect sustainable investing to grow from 53 per cent of investors to 66 per cent over the next five years. Three quarters of investors (75 per cent) expect it to become the norm in a decade, well above the global average of 58 per cent.
Leading adopters of sustainable investing are UAE investors aged over 65, with 73 per cent of this age group expecting to hold sustainable investments by 2023, compared to 65 per cent of 18 to 34-year-olds.
“The findings of the study are very encouraging for the future of sustainable investing, but it also uncovered some clear barriers that the financial industry can help break. Investors say that they would like to better appraise what impact their sustainable investments will have, and need guidance on where to find the best partners and options,” said Ali Janoudi, head of Wealth Management Central & Eastern Europe, Middle East & Africa at UBS.
The study finds that among non-adopters of sustainable investing in the UAE, 72 per cent say quantifying impact is the biggest barrier.
Nearly as many 69 per cent (compared to 68 per cent globally) believe that sustainable investment options are not firmly established, noting short track records and a lack of well-known sustainable companies. Furthermore, a strong perception exists among UAE non-adopters that sustainable investments have higher fees, with 56 per cent holding this view compared with 46 per cent globally.
UAE investors highly passionate about philanthropy
Dubai: UAE based high net worth investors are very keen on acting sustainably in everyday life, and 80 per cent feel strongly about using their time and resources to help protect the environment compared to a global average of global average 65 per cent, according to recent study UBS Investor Watch report.
The study notes that the UAE investors are some of the most passionate when it comes to philanthropy, with over 9 in 10 (92 per cent) believing it is their responsibility to give back and that doing good is more important than having more money. This mentality translates into their investment approach, as a significant majority of the UAE’s wealthy investors think it’s very important to use their time and resources to help create a better planet.
The study found that all ages and genders in the UAE are engaged with these issues. As a result, 83 per cent of UAE investors are actively aligning their spending decisions with their personal values compared to 81 per cent globally and paying more for products from companies with sustainable practices.
Despite remaining deterrents, UAE investors expect sustainable investing to grow significantly in popularity, from 53 per cent adoption today to 66 per cent over the next five years. In fact, UAE investors are the most convinced of all countries that sustainable investing will become the new normal in 10 years (75 per cent).
In contrast, only one third of investors in the United States and United Kingdom agree that sustainable investing will become mainstream in this time period.