The United Nations (UN) Sustainable Development Goals (SDGs) are not getting the investment needed to help the world meet critical targets for combatting challenges such as poverty and climate change by 2030, new research from Standard Chartered revealed.
The $50 Trillion Question investigates how some of the world’s largest asset managers – with a combined USD50 trillion in assets under management (AUM) – are investing at this critical time for the global economy and the environment.
The research points to a growing focus on sustainability, with 81 per cent of investment firms now taking a disciplined approach to environmental, social and governance investment.
However, this is not translating into investment in the SDGs. Only 13 per cent of the assets managed by our respondents are directed towards SDG-linked investments.
Some 55 per cent claim the SDGs are not relevant to mainstream investment and 47 per cent said investment in the SDGs is too difficult to measure. However, one fifth of investors admit that they were not aware of the SDGs.
Respondents point to regulatory changes, favourable tax treatment, evidence of higher returns, better data for measuring impact, and increased demand from retail investors as the top five factors that might spur on more SDG investment.
The research shows that 64 per cent of AUM are invested in the developed markets of Europe and North America. Asia, which includes a number of developed markets, takes 22 per cent, while just two per cent, three per cent and five per cent of the assets are invested in the Middle East, Africa and South America.
This contrasts with 88 per cent of investors saying that investments in emerging markets have matched or outperformed developed markets over the past three years.
The perceived risk posed by emerging markets is a major barrier to investment. Over two-thirds of investors believe emerging markets are high-risk, compared to 42 per cent who believe the same for developed markets.
Meanwhile, COVID-19 may have made it even harder for emerging markets to get the investment they need. Some 70 per cent of investors believe the pandemic has widened the capital gap further.
Standard Chartered CEO, Corporate, Commercial and Institutional Banking Simon Cooper said, “Much progress has been made in recent years to realise the SDGs, but this study makes clear the need to move faster. A seismic, unprecedented surge in private-sector investment – alongside public investment and commitments – will be required to bridge the gap and hit the 2030 SDG targets.
“There is no single answer to The $50 Trillion Question, but it is evident that investors need to expand their focus beyond developed markets if we are to achieve these goals. Emerging economies offer investors a unique opportunity: strong returns combined with the chance to have a significant, positive impact. Now is the time to seize it.”