Despite the increasingly broad acceptance of green and sustainable finance in China, significant barriers remain. Over half of respondents report obstacles to investing in the green and sustainable economy.
The returns available are very clearly the chief obstacle that issuers and investors identify. Over 70% of those who perceive obstacles see returns on green and sustainable investing as insufficient.
Issuers feel this barrier even more keenly than investors. Three quarters of issuers judge green and sustainable returns inadequate, compared with two thirds of investors. However, the survey’s largest investors by assets under management were all critical on this point.
Disclosure is also a significant issue, particularly for investors: 60% see it as inadequate, as do 42% of issuers. Issuers also tend to see green and sustainable investment opportunities as not clearly communicated — the third-ranking obstacle overall. Time horizons are an issue, too. A third of respondents — both issuers and investors — view the length of commitment involved in green and sustainable investing as too long for their appetite.
Strikingly, risk does not feature consistently as a major consideration. Of nine potential obstacles to investing in the green and sustainable economy, only the notion of government not wanting investment in green and sustainable areas is less often regarded as an obstacle. However, a different question about “investing in a green and sustainable way” brings out a different risk perception among investors.
Seventy percent will consider investing in this way, but among the rest, 32% cite risk as an obstacle. It is the fifth most commonly mentioned barrier. The most widely felt obstacle is a lack of expertise in this area (44%), while 36% are put off by each of regulatory or legal barriers; lack of return; and a perception that clients would not want this kind of investing.
Twenty-eight percent of investors who perceive obstacles simply say they prefer not to invest in green and sustainable opportunities.