ESG assets are forecast to exceed US$100 trillion by 2028¹ and US$150 US trillion by 2034, with one in every three US Dollars currently invested already taking account of ESG factors².
The Gulf wealth management community has clearly embraced this trend towards sustainable investment, conscious that it resonates with the next generation in particular.
This shift in focus was highlighted recently in the 'Global Attitudes to Wealth Management' study, prepared by Gateway Global in partnership with Jersey Finance – a not-for-profit organisation that represents and promotes Jersey's 60-year-old international finance centre (IFC). As the first IFC to set up an office in the Dubai IFC, in 2018, Jersey has a unique perspective on Islamic wealth management.
The report analysed a cross-section of responses from 2,000 Muslim customers in a number of key markets – London, Kuala Lumpur, the GCC, and South Africa – and found that the soaring demand for ESG principles in mainstream investments is also driving demand for Shari'a-compliant wealth management solutions.
Notably, more than half of the respondents to the study said that they would opt for a Shari'a compliant investment solution even if the performance was inferior to an equivalent conventional investment option. In contrast, 48% would choose an ethical only product under similar circumstances, suggesting a strong preference for Islamic over generally ethical products. Further, 96% believed philanthropy to be important, with 79% already making significant contributions.
Interestingly, however, there was no homogenous attitude towards non-Shari'a compliant products. Many see Shari'a compliance as a framework for investing, but not always exclusively.
This reflects a common and very human desire to 'do the right thing' by one's family, community and wider society.
Irrespective of religion, the indication is that investors of all stripes are increasingly placing value on socially responsible investments, with a shared common purpose to unleash the vast potential of impact investment for the good of humanity.
Investors in the Gulf can be reassured that, as they grasp the opportunities in the ESG arena, they can rely on the considerable Shari'a and non-Shari'a expertise that Jersey offers to help them meet their strategic ambitions.
Footnotes
¹ Deutsche Bank and GSIA
² Forum for Sustainable and Responsible Investment (2020)
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