Standard Chartered’s Sustainable Banking Report 2022: Mobilising retail investor capital has found that USD8.2 trillion of investable retail wealth could be channeled into sustainable investments by 2030 to finance environmental, social, and governance (ESG) objectives in 10 growth markets. In Kenya, USD19 billion KES 2 trillion be mobilized towards top ESG priorities, particularly the financing of the climate transition.
This capital could also play a critical part in bridging funding gaps in Kenya’s other ESG priorities including food and water security, human rights, and poverty. The new research by Standard Chartered identifies a USD8.2 trillion potential for retail capital mobilization across 10 growth markets, highlights barriers faced by currently faced by investors, and provides solutions to expand sustainable investing (SI) into a mainstream asset class.
Mobilizing investor capital to finance the climate transition in growth markets
According to the research, Kenya has a high potential for growth in sustainable investing, largely due to its significant population and rising domestic wealth. The market could mobilize USD19 billion in sustainable retail investment by 2030. Across Kenya, nearly 40% of investors want to put their money towards addressing climate issues.
Greater access and transparency in the sustainable investment ecosystem could mobilize Kenya’s USD19 billion of retail capital potential in reaching its carbon neutrality targets, aside from other ESG issues of concern to retail investors.
The top ESG priorities for investors in Kenya include:
- Climate change and carbon emissions; Food and water scarcity (36%)
- Poverty and income inequality (32%)
- Human rights (24%)
Investor barriers need to be overcome to unlock USD19 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 Kenya identified the following as their top barriers to increasing their sustainable investments:
- Comprehensibility (48%)
- Accessibility (48%)
- Comparability (47%)
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
Paul Njoki, Head of Affluent Banking and Wealth Management in Kenya & East Africa said, “Individuals have the power to be catalysts for change. Our research shows that US$8.2 trillion of retail investor wealth could flow into sustainable investments if we remove the barriers that are holding them back. The top ESG-related issues across the 10 markets we 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 want 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 the expertise and solutions to help investors achieve both profit and purpose. Importantly, we need to enable the shift now for a more sustainable future.”