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Building Climate Resilience Via Investment Migration To Secure A Sustainable Future

Henley & Partners has seen a significant uptick in interest from both private clients and governments in investment migration programs as an effective mechanism to improve their resilience to the impacts of climate change and mitigate other sustainability risks. Besides phasing out fossil fuels, the other two core themes for the upcoming UNFCCC COP28 conference in Dubai, UAE, are building climate-resilient societies and investing in climate solutions. In its inaugural Henley Wealth and Sustainability Report published today, the international residence and citizenship advisory firm highlights how investment migration can assist in addressing both these significant global challenges.

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The innovative study analyzes over 150 data points across five key sustainability and wealth parameters including population density and CO2 emissions per capita, achievement of the UN’s Sustainable Development Goals (SDGs), and unique wealth tier and wealth per capita data from global wealth intelligence firm New World Wealth. The report focuses on G7 nations, BRICS member states, including the six new countries that will join the bloc in January 2024 (Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE), and a selection of 19 countries that host investment migration programs, which enable investors to acquire residence or citizenship in return for making a significant contribution to the economy.

The G7 brings together seven of the world’s most advanced industrial economies in the Global North, while the new BRICS plus Six configuration represents major emerging economies in the Global South. As Dr. Juerg Steffen, CEO of Henley & Partners, points out in the report, both groupings represent a significant share of the global economy and population, and both aim to tackle pervasive global issues such as climate change. “Investment migration can provide much-needed foreign direct investment to help meet our sustainability challenges. Several countries are already channeling program inflows into projects to boost their countries’ climate resilience for the benefit of their citizens. Grenada, for instance, has strengthened its resilience against natural disasters by offering investors citizenship in exchange for a contribution to the country’s National Transformation Fund, which supports a range of industries including alternative energy. A non-refundable contribution to Antigua and Barbuda’s National Development Fund is another example of how a country is driving its transition to renewable energy through citizenship by investment.”

Investment migration countries score highly

An analysis of the report data reveals that most investment migration countries are in the high wealth tier (with wealth per capita of USD 50,000 – USD 300,000) or the very high wealth tier (with an average wealth of over USD 300,000 per person). With wealth including only individuals’ liquid investable assets, wealth per capita is a reliable indicator of the financial health of an economy, and the Top 10 countries in terms of wealth per capita are all investment migration host countries, with Luxembourg in 1st place with wealth per capita of USD 580,000, followed by Switzerland (USD 352,000), and Australia 3rd (USD 205,300). Next is Singapore, with wealth per capita of USD 202,500, and in 5th place is the USA (the highest ranking G7 country), with wealth per capita of USD 198,200.

The SDG Index scores provide insight into how countries are performing in terms of achieving the SDGs. All but four of the countries analyzed in the report score above the global average (which is just under 67), and seven of the Top 10 offer investment migration programs. G7 member Germany is 1st, scoring 83.4 out of 100, investment migration host country Austria is 2nd with 82.3, followed closely by France with 82.1.

Commenting in the Henley Wealth and Sustainability Report, Charles Phillips, a leading researcher and expert on sustainable development, says climate adaptation is a critical area requiring far greater flows of investment. “Adequate funding is essential for building resilience against the deepening environmental challenges brought by climate change. Finance is equally desperately needed to transition to sustainable, low-carbon societies on a global scale. Global warming has now passed 1.25 C above pre-industrial levels, and the climate impacts this is causing, and will increasingly cause, are highly disruptive to the economies and daily lives of countries worldwide, but especially lower-income countries.”

As part of his contribution to the report, Dr. José Caballero, Senior Economist at the IMD World Competitiveness Center, analyzed 10 countries with investment migration programs in terms of their performance in the Hinrich–IMD Sustainable Trade Index, and notes that “there is a significant degree of resilience among investment migration host countries (IMs). The data shows that these countries have been able to steer off the different global events of the last few years including the Covid-19 pandemic and the Russia–Ukraine war, and their repercussions. To put it differently, results underline the fact that IMs remain highly attractive for investment migration because of the sustainability of their economies, societies, and environments."

Low CO2 emissions in the Global South highlights climate injustice

The four countries in the report that score below the global average on the SDG Index are all in the Global South. Namibia scores 64.3, South Africa 64, India 63.4, and Ethiopia 54.6. Here it is interesting to consider the CO2 emissions per capita data, as the bottom six countries with the lowest emissions per capita are all in the Global South, highlighting the plight of the emerging world, which is bearing the brunt of the climate crisis despite contributing far less to global warming. Ethiopia has the lowest CO2 emissions per capita, at 0.01%, followed by Namibia (0.15%), India (0.16%), Egypt and Brazil (each 0.19%), and Mauritius (0.29%). The Top 5 CO2 emissions per capita culprits are all in the high wealth tier: the UAE (1.99%), Australia (1.46%), Saudi Arabia (1.41%), Canada (1.33%), and the USA (1.3%).

In terms of population density, namely, the number of people per km2, the jury is out as to whether this is a net positive or negative in terms of sustainability, but the top three and bottom three are all investment migration host countries, which means investors have options depending on their preferences. Three island nations have the highest population densities: the city-state of Singapore is by far the most densely populated in the sample, with 7,595 people per km2, followed by Malta (1,620), and Mauritius (634). India is next with 473, and Japan makes up the Top 5 with 345 people per km2. The six most sparsely populated countries are Namibia and Australia, each with 3 people per km2, Canada (4), Russia (9), and Argentina and Saudi Arabia (17).

Andrew Amoils, Head of Research at New World Wealth, argues that a low population density can be a major advantage. “Low population density countries such as Australia and Namibia have a large amount of resources and land relative to the number of people (i.e. high resources per capita). On the flip side, densely populated countries such as the UK and Germany are often heavily reliant on neighboring countries for resources."

Prof. Trevor Williams, former Chief Economist at Lloyds Bank Commercial banking, says the Henley Wealth and Sustainability Report can assist those looking for opportunities, either private or public, to invest in sustainability projects and other carbon-reducing initiatives. “The framing allows those seeking areas where climate change is less threatening, where adaptation is occurring fastest, and as a result where threats to sustainability are lowest to locate to achieve that goal. Through this approach, these individuals are also able to see which countries allow investors to acquire residence status through various programs, and where the opportunities for mitigation and adaptation will offer the highest returns on investment. It also shows where the best investment options are for funds that are seeking returns through sustainability and green and carbon-reducing projects and investment activities.”

Sustainability is at the forefront for investment migration hosts

Looking at the SDG Index scores, in addition to Austria, which ranks 2nd in this parameter and offers two investment migration options — the Austria Private Residence Program and Austria Citizenship by Investment, there are six other countries in the Top 10 that offer residence programs that enable talented and affluent individuals and their families to relocate to their shores. The UK ranks 4th with an SDG Index score of 81.7, Switzerland is 5th (80.5), Spain 6th (80.4), and Portugal 7th (80). Italy 9th (78.8) and Canada 10th (78.5) also make the Top 10.

Commenting in the report, Dr. Areef Suleman, Director of Economic Research and Statistics at the Islamic Development Bank (IsDB) Institute, says the analysis provides a data-driven perspective on how residence and citizenship by investment programs can be leveraged to enhance investment resilience and sustainability. “Investment migration countries consistently performed better than G7 and BRICS plus Six countries in key areas such as environmental responsibility, infrastructure reliability, healthcare and education quality, economic growth, and wealth accumulation. These insights underscore the wisdom investment migration offers high-net-worth individuals in securing a sustainable future for them and their progeny. In an ever-changing world, data and evidence-based decision-making provide the right compass for investors and families seeking a path to economic prosperity and sustainability.”

Other investment migration countries that score above the global average on the SDG Index are New Zealand and Greece, (each 78.4), Luxembourg (77.6), the USA and Australia (each 75.9), Malta (75.5), Singapore (71.8), Türkiye (70.8), the UAE (69.7), Egypt (69.6), and Mauritius (68).

As Sunita Singh-Dalal, Partner of the Private Wealth & Family Offices at Hourani in the UAE points out in the report, “attractive residence programs offered to foreign investors have positioned countries such as the UAE and Saudi Arabia as optimal global investment destinations. Their ambitious visions and clear strategies create a very attractive environment for investment migration. The future for investment migration across the region is undisputedly incredibly buoyant as it continues to intertwine with the growing imperative for continual, sustainable investment.”

Dominic Volek, Group Head of Private Clients at Henley & Partners, agrees that no one should be planning for the long term without considering the climate change factor. “By investing in a country that is putting sustainability at the forefront of its national agenda, investors gain the right to relocate their families, their assets, and critical infrastructure to a place that will be able to better withstand future climate shocks and be more sustainable in the longer term.”

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