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Sustainable Financing and Investing survey – Asia Report
Asian issuers show global and regional leadership in embrace of sustainability agenda.
Asian issuers are assigning high levels of importance to environmental and social issues this year, putting them ahead of their global peers and investors in the region.
Some 58% of Asian issuers say that these issues are very important to their organisation, which is the highest percentage among issuers of any region and a slight increase (56%) on the those who said the same last year. By comparison, 32% of Asian investors said these issues are very important to them.
What’s more, almost all Asian issuers (96%) say they have increased their focus and attention on environmental issues, social issues or both in the past 12 months, with 60% of them – a regional high – focusing on environmental issues specifically.
For their part, some 72% of Asian investors have also increased their attention to these issues from last year, indicating the strength of momentum supporting sustainable economic change in the region.
Yet this year, issuers in particular seem to be driving Asia’s sustainability agenda, and leading investors on some key measures. For example, some 12% of Asian issuers have already made a net zero commitment and 76% (notably higher that the global average of 67%) say they are working towards making one. In contrast, some 9% and 25% of the region’s investors, respectively, say the same.
By country, some 13% of China issuers, and 10% and 6% of issuers in Singapore and Hong Kong SAR, respectively, say they have already made commitments. By comparison, 8% of Singapore investors, 6% of China investors and 4% of investors in Hong Kong SAR say the same.
Together with this, more than three quarters of Asian issuers (led by 79% of China issuers) say they expect their company to actively seek advice on green, social or sustainability issues in relation to capital markets transactions in the next 12 months – the highest percentage of any region.
So what’s driving issuers’ embrace of these issues?
China’s powerful policy push on developing a greener more sustainable economy has been an important catalyst, influencing activity across the region. But especially important this year for issuers has been key stakeholder groups.
Indeed, pressure from employees (55% - up from 13% last year) and customers (48% - up from 28%) are the top two reasons why Asian issuers care about these issues. In stark contrast, less than 5% of Americas issuers see these issues as important reasons to care, significantly lower than the percentages last year.
2021 key findings:
Strategic importance – 58% of Asian issuers say environmental and social issues are very important to their organisation, which is a slight increase on last year (57%) and the highest percentage among issuers globally.
Reasons to care – Three clear factors underpin why Asian issuers care about environmental and social issues: Pressure from employees (53%); pressure from customers (48%); and regulatory requirement (45%).
Reasons to care – Three clear factors underpin why Asian investors care about these issues: Regulatory requirement (46%); belief that its right to care about the world and society (41%); recognition that paying attention to these issues can improve returns or reduce risk (42%).
Net zero progress – Asian investors and issuers are making progress on setting carbon neutral or ‘net zero’ commitments but trail other regions; 9% of investors and 12% of issuers have already made a commitment, among the lowest percentages globally.
ESG investing opportunity – Asian investors are trailing investors in other regions on having a firm-wide policy on responsible investing or ESG issues – 40% of them say they have such a policy, the second lowest percentage after MENAT.
ESG skills gap – Of those Asian investors who say they are being held back from pursuing ESG investing more fully and broadly, most (41%) say the main reason is a shortage of expertise or qualified staff, the second highest percentage globally.
Disclosure drive – Some 61% of Asian issuers say the level of disclosure they currently make on environmental and social issues is about right, with 34% saying they expect it to increase and consider that a good development.
Issuers examined – Most Asia investors say the information disclosed by companies on their environmental performance is inadequate (48%). Some 36% say it is adequate, and 16% excellent.
Issuers examined – Most Asia investors say the information disclosed by companies they invest in on their social performance is inadequate (42%). Some 37% say it is adequate, and 21% excellent.
Green and sustainable finance – Some 73% of Asia issuers say they expect their company to actively seek advice on green, social or sustainability issues in relation to capital markets transactions in the next 12 months – the highest percentage of any region.
COVID shifts, social agendas & more
Global perspectives from issuers and investors in our latest HSBC’s 2021 Sustainable Financing and Investing Survey.