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Sustainable Financing and Investing survey – Europe Report

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European investors and issuers embrace new roles and responsibilities.

While capital market participants’ powerful embrace of sustainability is a global movement, European investors and issuers are at the forefront of it, often demonstrating to their peers in other regions what change can look like.

This year, our European respondents, and particularly investors, are showing their global leadership on green and sustainability matters across several different areas.

For instance, not only are European issuers and investors leading their peers in the global race to carbon neutrality (24% and 38% of them, respectively, have already made a net zero commitment), the region’s asset allocators and owners are also way out in front of their global peers in implementing a firm-wide policy on responsible investing or ESG issues (91% have done so – up from 43% last year – compared to the global average 59%).

At a country level, French issuers (24%) are ahead of their German peers in setting targets (16%), but they trail investors in both countries; about 40% of allocators and owners in France and Germany say they have made a commitment.

Interestingly, some 88% of European investors – the highest percentage of any region – say nothing is holding them back from pursuing ESG investing more fully and broadly (up from 54% last year), which suggests their leadership in this area could extend even further.

In addition to this, there is strong, broad-based engagement and commitment among European respondents to environmental and social concerns – 97% of issuers and investors in the region say they are important to their organisation, which is a regional high. And in the past 12 months, half of them say they have also increased their attention to both of these issues, notably more than their peers in all other regions.

2021 key findings:

  • Reasons to care – Multiple factors are underpinning why European investors care about environmental and social issues: Regulatory requirement (65%); Pressure from customers (64%); Belief that its right to care about the world and society (64%); Pressure from employees (62%).

  • Reasons to care – Two clear factors underpin why European issuers care about these issues: Belief that its right to care about the world and society (85%); Recognition that paying attention to these issues can improve returns or reduce risk (78%).

  • Net zero heroes European investors and issuers lead the world on making progress on setting carbon neutral or ‘net zero’ commitments; 38% of investors and 24% of issuers have already made a commitment – the highest percentages of any region.

  • ESG investing leadersEuropean investors lead the world on having a firm-wide policy on responsible investing or ESG issues – 91% of investors say they have such a policy (up notably from 43% last year) the highest percentage of any region.

  • Disclosure drive – 69% of European issuers say the level of disclosure they currently make on environmental and social issues is about right, with 20% saying they expect it to increase and that is a good thing.

  • Investment boost – European investors rank most highly consistent ESG ratings, and companies improving their disclosure voluntarily, as the factors that would be most helpful to them in trying to invest sustainably.

  • Issuers examined – Most European investors say the information disclosed by companies they invest in on their environmental performance is adequate (39%). However, some 38% say it is inadequate, and only 23% say it is excellent.

  • Issuers examined – Most European investors say the information disclosed by companies they invest in on their social performance is adequate (39%). However, some 37% say it is inadequate, and 24% say it is excellent.

  • Green and sustainable finance – 62% of European 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.

  • Exit strategy – 71% of European issuers say they are considering reducing or getting out of some business activities which could be vulnerable to climate change – the highest percentage of any region globally.

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COVID shifts, social agendas & more

Global perspectives from issuers and investors in our latest HSBC’s 2021 Sustainable Financing and Investing Survey.