- Retail investors could be the key to unlocking finance for Environmental, Social and Governance (ESG) priorities if barriers are addressed
- Investors in Nigeria have the potential to channel billions toward the climate transition
Standard Chartered announced the launch of its Sustainable Banking Report 2022 titled ‘Mobilising Retail Investor Capital’. The research report, which explores ESG investment opportunities, revealed that for retail investors, USD198 billion could be mobilised towards top ESG priorities, particularly financing the climate transition. It noted that this capital could also play a critical part in bridging funding gaps in Nigeria’s other ESG priorities including food and water security as well as pollution and waste management.
The new research by Standard Chartered also suggested that an estimated USD8.2 trillion of investable retail wealth could be channelled into sustainable investments by 2030 to finance ESG objectives in 10 growth markets. It also highlights barriers currently faced by investors and provides solutions to expand sustainable investing (SI) into a mainstream asset class.
Mobilising investor capital to finance the climate transition in growth markets
According to the research, Nigeria has a high potential for growth in sustainable investing, largely due to its significant population and rising domestic wealth. The market could mobilise USD198 billion in sustainable retail investment by 2030. Across Nigeria, nearly 40% of investors respectively want to put their money towards addressing climate issues.
Greater access and transparency in the sustainable investment ecosystem could mobilise Nigeria’s USD198bn of retail capital potential in reaching its carbon neutrality targets, aside from other ESG issues of concern to retail investors, such as pollution, waste management and energy security.
The top ESG priorities for investors in Nigeria include:
- Food and water scarcity (40%)
- Climate change and carbon emissions (35%)
- Human rights, poverty and income inequality (32%)
Investor barriers need to be overcome to unlock USD198 billion
The report further highlights the need for investor and market-specific barriers that need to be overcome to translate this investor interest into actual impact.
Investors in Nigeria identified the following as their top barriers to increasing their sustainable investments:
- Accessibility (54%)
- Comprehensibility (46%)
- Comparability (44%)
These findings demonstrate how financial institutions can play a critical role in unlocking available capital by breaking down these barriers for retail investors, using analysis based on investor behaviour and motivations. The report shows the need for clear action to:
- Democratise access to sustainable investments by making more solutions available in more markets via digital platforms
- Provide clear and transparent information
- Address investor apprehensions and provide data-led advice on how to match their ESG priorities with the right solutions
Lanre Olajide, Country Head, Wealth Management, said: “Individuals have the power to be catalysts for change. Our Global research shows that US$8.2 trillion of retail investor wealth could flow into sustainable investments if we remove the barriers that restrict and limit these opportunities. According to the report, the top ESG-related issues across the 10 markets surveyed – climate change, pollution, poverty, corruption, food scarcity and energy security – correspond to the areas that investors are most interested in addressing. We know that a rapidly growing number of our clients in Nigeria are exploring opportunities for their investments to make a positive impact on the environment and in society, and there is significant appetite to take ESG investment from a niche play to a mainstream investment strategy. As a Bank, we have both the expertise and solutions that enable investors achieve both profit and purpose. Importantly, we are well positioned to drive initiatives and solutions that enable the shift now for a more sustainable future.”