Sustainable investing has reached a tipping point, with awareness and interest at an all-time high. However, investor apprehensions, particularly about the lack of measurement and transparency, are preventing it from becoming more mainstream, a new survey finds.

Standard Chartered’s “Sustainable Investing Review 2021”, the bank’s fourth such study since 2018, reveals an upward trend in sustainable investing among more than 2,000 investors in mainland China, Hong Kong, Taiwan, Singapore, India, the United Arab Emirates, and the United Kingdom. The allocation of sustainable investments in investor portfolios is on the rise: 13% of investors already have more than 25% of total investments channelled into sustainable solutions, compared with just 2% of investors in 2020.

Looking into sustainable investing trends across a four-stage adoption cycle (awareness, interest, intention and adoption), the study finds that 82% of respondents know what sustainable investing is, 81% show interest in it, 40% of those who have not yet invested in sustainable solutions plan to do so in the future, and 61% have placed funds in a sustainable investment solution.

Source: Standard Chartered

These insights, gathered amid the ongoing pandemic and increasingly visible impacts of climate change, show that the majority of investors (72%) have a growing sense of responsibility and are looking to do good with their wealth.

Marc Van de Walle, global head of wealth management at Standard Chartered, comments: “Investors look beyond returns to positive impact, no longer seeing the two as mutually exclusive. They want to use their wealth to help solve the pressing challenges faced by the world. From improving access to healthcare and clean drinking water, to promoting economic inclusion for women and addressing climate change, investors are on the lookout for opportunities to make a difference.”

While there are positive trends in sustainable investing, investors express a number of apprehensions that are holding them back from taking action. According to the survey, 69% say they need more numerical evidence of the impact being achieved from sustainable investments, 51% feel sustainable investing is simply too new, and 43% believe donations can achieve a more immediate social outcome.

Some investors still hold that solutions that do good in the world come at the cost of investment returns. Almost half (47%) of investors say they have concerns about the financial performance of sustainable investments.

Source: Standard Chartered

The study says: “Traditional investments provide defined, clear and numerical evidence of their return and benefit, albeit often only financial, to their investors. This information is provided by an industry of ratings agencies, analysts and consultancies that produce well-researched and established intelligence reports into financial products. In contrast, the development of effective measurements and ratings has been slow to take off in the world of sustainable investing. The inconsistent and patchy nature of data has created apprehension among investors about the actual impact of their investments. To increase adoption, investors need more standardized and clearly measurable outcomes.”

The majority (74%) of respondents indicate that they could become more comfortable with sustainable investing if advised by a financial expert on their investment decisions.

Source: Standard Chartered

“To ensure we cross the tipping point, it is vital for the industry to collaborate and develop robust governance frameworks and address the concerns with transparency and measurement,” Van de Walle notes.

The findings also highlight the crucial role of professional advice. “By providing personalized advice according to our clients’ sustainability goals, and access to the most relevant sustainable investment solutions, we can enable our clients to make a positive impact, along with financial returns,” he adds.

Standard Chartered commissioned behavioural finance expert Oxford Risk to conduct the survey from May 20 to June 6 2021.