High net worth (HNW) individuals in the Middle East are increasingly taking into account sustainability and ESG criteria when making investment decisions, according to research by global wealth manager Lombard Odier.
The survey of 300 HNW investors in the region found that 81% already keep in mind environmental, social and governance issues when looking at investments, with 85% looking to increase their exposure to ESG in the future.
For a long time, there has been a belief that investing sustainably would mean sacrificing on returns, but this attitude seems to be shifting in the Middle East as 72% of respondents stated that sustainable factors can actually generate “superior returns”.
Although HNWs in the region are warming up to ESG, Lombard Odier highlighted a general need for more clarity and advice from specialists on how to invest sustainably, with 78% looking to receive regular research on investment ideas, and 77% on portfolio sustainability benchmarking.
This puts the spotlight on financial institutions to enhance their ESG offerings, especially considering that just 29% of the respondents were very satisfied with the service they currently receive from their banking partner, while 58% were quite satisfied.
Shariah strategies
Lombard Odier also found a significant overlap between Islamic and sustainable finance, as they both involve acting ethically and responsibly.
This is true for most HNW investors in the region, regardless of age, as they want their investments to reflect traditional Middle Eastern values.
This includes Sharia-compliant strategies as well as plans to increase allocations to Islamic products, with 67% stating that observing such principles is important to them.
A third (30%) have also shown interest in private equity that complies with Islamic finance values.
Arnaud Leclercq, partner holding privé and head of new markets at Lombard Odier, said: “The results of our survey are very encouraging, demonstrating that HNW investors have already taken steps to integrate their Islamic beliefs via Shariah-compliant strategies, and want to learn more about investing sustainably.
“Investors also plan to increase those allocations, illustrating a growing awareness that they can play an important role in driving positive social and environmental change.”
