Environmental and social concerns are increasingly central to the way issuers and investors approach financing, according to a new survey from HSBC.
More than 90 per cent of global investors and issuers of corporate debt say these factors are important or very important in their thinking.
But 60 per cent of investors say there are barriers that deter them from investing sustainably – including a lack of expertise and comparable environmental, social and governance (ESG) data across different investments, and a shortage of suitable investment opportunities.
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The findings come from HSBC’s Sustainable Financing and Investing Survey 2019 , a poll of 500 investors and 500 issuers from the Americas, Asia, Europe and the Middle East.
In a speech at New York Climate Week, Samir Assaf, Chief Executive, Global Banking and Markets, HSBC, said: “Our survey proves that no-one is indifferent to the challenge of mitigating global climate risks and transitioning to a low-carbon future. But what’s equally clear is that there are still significant hurdles to overcome.”
The survey also found that the most common reason investors and issuers focus on environmental and social impact is because they believe it is the right thing to do. Other factors include:
- Regulatory requirements
- The attitudes of employees and customers
- The hope or belief that socially and environmentally responsible investment may offer improved returns and reduced risk
Most issuers incorporate ESG factors into business plans – with the majority adopting strategies for reducing their environmental impact, and for ensuring they have a positive impact on society. Just over half also disclose these strategies publicly.
And most investors expect their focus on social and environmental issues to increase over the next two years, with 63 per cent expecting to buy more green, social or sustainable bonds.
But 27 per cent say they lack expertise or staff with the skills to analyse environmental and social issues. A similar number say they do not have the information they need to compare different investment opportunities effectively.
Increased disclosure on environmental and social issues could help to change this, according to Mr Assaf. He pointed to the Task Force on Climate-related Financial Disclosures (TCFD) as a good example of a common standard that all investors and issuers could sign up to. Yet only around 40 per cent of issuers who responded to the survey currently follow the TCFD recommendations.
Mr Assaf also underlined the contribution that the financial sector, including banks such as HSBC, could make in supporting the global transition to a low-carbon economy. “As one of the world’s leading international banks with an unrivalled global network and a leading position in the fast-growing Asian economies driving global growth, we are well aware of the important role we can and must play,” he said.
To find further detail and regional reports, visit the HSBC Global Banking and Markets website (opens in new window)
Note: GlobalCapital and Euromoney Surveys conducted an online survey of investors and capital markets issuers in June and July 2019 on behalf of HSBC. The report was based on a structured sample of responses from 500 investors and 500 issuers from 15 countries and territories: Brazil, Canada, mainland China, France, Germany, Hong Kong, Indonesia, Malaysia, Mexico, Saudi Arabia, Singapore, Thailand, the United Arab Emirates, the UK and the US.