Investing in a sustainable recovery

10 July 2020

The coronavirus pandemic is a wake-up call that shows why we must build a more sustainable economy, says HSBC Group Chief Executive Noel Quinn.

Why does the recovery after COVID-19 need to be sustainable?

The COVID-19 pandemic is a live example of a sustainability crisis. We have all felt its economic and social impact. A climate crisis has the potential to be much more drastic in its consequences and longevity. We should view this as a wake-up call: not one based on a hypothesis, but on reality.

A sustainable recovery is imperative to build back a more resilient and just model for economic stability. It also opens up significant opportunities for investment in new innovations, industries, and infrastructure. This is an opportunity to invest in the future of our planet.

How can governments and businesses work together for a sustainable recovery?

The COVID-19 crisis has shown that the interests of government and business are aligned. Both have an interest in building competitive market economies that deliver strong stakeholder returns – both financially, for our customers, and for the planet. Neither the public nor private sectors can act alone on this. The scale of the challenge, or opportunity, is too great.

We need to use this opportunity to increase our collective ambition to re-engineer the global economy towards sustainable growth. It’s important for banks to advocate for sustainable growth, in the interests of our customers and the communities we serve.

We can offer our expertise to governments to help shape policy and regulatory frameworks – to bring sustainable finance to the mainstream, deliver systemic change, and unlock capital flows for green growth.

Upcoming multilateral discussions such as the G20, G7, and of course COP26 – the United Nations Climate Change Conference in November 2021 – will be crucial to informing the next phase of recovery.

How can sustainable investment be scaled up successfully?

It needs to be a truly global effort. It’s critical we don’t focus just on relatively wealthy countries, such as those who are members of the Organisation for Economic Co-operation and Development (OECD). Emerging markets face some of the biggest challenges, and sustainable investment here will have the greatest long-term impact. It’s vital to build international, public-private coalitions to align all interests.

In practical terms, agreeing to common definitions for sustainable investment is the key to scaling up. HSBC has been working with the International Finance Corporation, the OECD and others to mobilise infrastructure investment in emerging markets, through our Finance to Accelerate the Sustainable Transition-Infrastructure (FAST-Infra) initiative. This aims to develop a consistent labelling system for sustainable infrastructure investment.

Crucially, we need to develop pathways to net zero carbon for businesses and industries. My personal priority is to support our customers to identify a way forward through transition risks and new ways of operating.

What are the most promising trends in sustainable finance today?

Recent events have sharpened the focus on resilience to economic shocks. As a consequence, there’s increased emphasis on the link between the environmental and social elements of ESG and the role of sustainable finance in addressing these. I think resilience will – and must – remain an important focus for markets, and our customers, for some time.

We also need better data to help us move forward at pace. So it’s important that governments and the financial sector work together to define common standards for disclosure and measurement. I am personally interested to see what role clean technology, nature-based solutions, and climate innovation can play in building a more resilient and sustainable economy, and in helping these businesses to scale.

There is a lot to do – and we all need to play our part.

This is an edited version of an interview that was first published by the Future Investment Initiative (FII) in June 2020.