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Green Finance: Issuers are increasing their ESG focus

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The fact that Corona has not slowed down the trend towards sustainable financing can be seen from the number of transactions. Now a study by HSBC shows how firmly the ESG factor has long been anchored in finance departments.

The sustainability and green finance factor has become mainstream. This is the result of a survey of 2,000 investors and issuers that HSBC carries out annually and is exclusively available to DerTreasurer. In addition to companies, the issuers also include state institutions and banks. The study also clearly shows that the corona crisis is not stopping the trend towards a higher weighting of sustainability factors. Only 1.5 percent of all respondents said that the crisis had permanently halted their ESG efforts. For a little more than 9 percent of the investors and 12 percent of the issuers, the topic was put on hold “temporarily”.

In contrast, more than half of the investors surveyed and even three quarters of the issuers stated that the pandemic had “increased their commitment to the environment, society and governance (ESG)”. In some cases, it also led to the conviction that “they have so far paid too little attention to the subject,” writes the HSBC.

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European issuers take sustainability seriously

The fact that issuers perceive the environment and social issues as even more important than investors, according to the survey, is also shown in the European figures. 95 percent of companies consider these topics to be very important or somewhat important. For investors, it is only 79 percent.

While European issuers, with their ESG commitment of 95 percent, are slightly above the global average, European investors lag behind the global average. 86 percent of all investors worldwide rate environmental and social issues as very important or somewhat important. The authors of the study point out that this could also be due to the fact that European investors are already applying higher ESG standards than investors in other regions.

However, the study also reveals that around a quarter of all European investors do not want to develop a company-wide sustainable investment strategy. According to the authors, the reluctance of German investors is the greatest at 30 percent. Perhaps the reason is that ESG factors are already part of the analysis of every investment decision for many European investors. In any case, 39 percent of all investors in Europe state this, compared with only 31 percent worldwide.

Values ​​drive companies to ESG

However, it is not so much the investor side that motivates companies to be more sustainable than their own drive, according to the study. At 61 percent, the majority of those surveyed said that it is their own values ​​that drive their actions.

41 percent of the issuers also attribute the pressure to non-governmental organizations, the so-called NGOs. For 36 percent of those surveyed, their own customers are also important as motivation. In addition, around 36 percent expect higher returns on their investments if they take ESG factors into account. In contrast, capital providers and investors do not yet seem to play a decisive role here.

Investors are feeling regulatory pressure

Investors, on the other hand, are increasingly feeling the regulatory and societal pressure to deal with ESG factors. The most important driver for investors, however, remains the risk-return ratio. And here the study also shows that ESG has long ceased to be a purely moral issue for investors. Almost half of the investors state that the inclusion of sustainability factors improves their risk profile and increases their returns.

Daniel Klier, Global Head Sustainable Finance at HSBC, welcomes the fact that ESG deals are being “increasingly rated as a serious asset class” and less as an “expression of commitment to social and environmental issues”. This is a “positive development” because the “long-term success of ESG investments” lies in the ability to compete with the investment opportunities that are already established in terms of risk and return.

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