The trend toward sustainability is unstoppable. Despite the enormous challenges in the midst of the Covid 19 pandemic, capital market participants are now attaching greater importance to sustainable financing than they did a year ago.
That is the result of HSBC’s global “Sustainable Financing and Investing Survey”, for which 1,000 issuers and investors were surveyed globally. The result is an indication that the establishment of ESG is progressing faster than previously assumed. HSBC provides information about this.
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ESG is increasingly coming into focus
More than half of the investors surveyed, and as many as three-quarters of issuers, said that the pandemic had increased their commitment to environmental, social, and governance (ESG) issues or led them to believe that they had not paid enough attention to the issue so far. Of the 2,000 respondents, more than 90 percent consider ESG to be important or very important.
On the issuer side, global ESG engagement increased slightly: Compared to last year, the proportion of participants who rated ESG as “very important” increased by four percent. Overall, 93 percent of global issuers continue to consider environmental and social financing to be important. In Europe, this figure was even exceeded in the approval rating, with 95 percent of respondents agreeing.
Pressure from outside forces investors to invest in ESG
Due to the market volatility in 2020, global investors focused more on risk and return. This is also reflected in the valuation of ESG. While 94 percent of all respondents in 2019 still considered ESG important, this figure had risen to 86 percent of all respondents in 2020 and 79 percent in Europe. At the same time, regulatory and social pressure remains the most important basis for European investors when selecting investments. This was reported by 62 percent of the survey participants in Europe.
From a global perspective, however, the parameters risk/return and external pressure are becoming increasingly important for investors when selecting investments. Worldwide, 49 percent cited risk/return as the most important basis for decision-making, 43 percent expectations of society and 41 percent regulatory authorities.
“Sustainable financing has established itself in the mainstream of the capital markets faster than expected. As a result, ESG deals are increasingly seen as a serious asset class rather than an expression of commitment to social and environmental issues,” said Daniel Klier, Global Head of Sustainable Finance, HSBC. “This is a positive development because the long-term success of ESG investments lies in the ability to compete with already established investment opportunities in terms of risk and return,” he concluded.
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First published in INSTITUTIONAL Money.com, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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