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The Power of Transformation: Issuers and Investors Target ESG for Better Returns and Lower Risks

HSBC’s Sustainable Financing and Investing Survey 2021 captures how the capital markets are increasingly embracing environmental, social, and governance issues. Here, TMI presents some of the key highlights for treasurers to be aware of.

Companies and institutional investors increasingly understand that an active and positive stance towards environmental, social, and governance (ESG) is good for both the planet and business. This is one of the key findings of HSBC’s Sustainable Financing and Investing Survey 2021, which reveals that 51% of respondents believe that paying attention to these issues can help improve returns or reduce risk.

HSBC’s fifth annual global survey of 2,000 capital markets issuers and institutional investors, conducted in May and June this year, also found that nearly nine out of 10 issuers and investors (89%) say that ESG is important to their business. The theme is being taken particularly seriously in the Americas, where 80% of investors say ESG issues are very important more than double that of any other region.

Ramping up ESG activities

Companies are transforming their business models and capital allocation in response to the benefits of being proactive around ESG. Some 70% of issuers are considering ramping up climate-friendly business activities or starting new ones. In the Association of Southeast Asian Nations (ASEAN) region, 84% of issuers say they expect a noticeable or substantial change to capital allocation within the next five years.