Sustainable Financing and Investing Survey – Europe

European issuers are showing increasing commitment to green and sustainable financing, according to HSBC’s survey of capital markets issuers and investors in the region.

Overview

Executive Summary
  • Green and sustainable finance is rising in importance to European issuers. 76 per cent say environmental and social issues are very important to them.
  • 35 per cent of European issuers say their feelings about the importance of sustainability have strengthened since the pandemic, whereas fewer than 15 per cent of investors report this.
  • Issuers and investors agree on the potential presented by green and sustainable infrastructure investment.
  • European issuers are embracing disclosure. 71 per cent disclose information about their carbon footprint, compared with the global average of just 54 per cent.

 

Key Findings

 

With a history of innovation in sustainable finance – the world’s first green bond was issued to a group of Swedish investors – Europe is seen as deeply engaged in green capital markets. And, the numbers serve to back this up — EUR120 billion was invested in sustainable funds in 2019, twice as much as the previous year.

Our survey of capital markets issuers and investors in Europe reveals some divergence in thinking about sustainable finance between issuers and investors in the region. While interest in sustainable capital markets has traditionally been driven by investors, the balance of power appears to be changing, with 76 per cent of European issuers saying environmental and social issues are very important to them, scoring well above the global average of 62 per cent. In comparison, only 43 per cent of investors rate these issues as very important.

European issuers are motivated by a number of factors when it comes to engaging in sustainable finance. Two thirds regard caring about the world and society as the right thing to do. More than 40 per cent say that NGOs and pressure groups want them to take ESG factors into consideration, and 36 per cent say their customers want them to take ESG into account. Notably, over a third – above the global average – believe that ESG can improve investment returns.

In contrast, European investors appear to be more accepting of inequality and seem to minimise the significance of climate change. 12 per cent of European investors view climate change as a minor problem, whereas globally only 4 per cent of investors feel this way. Furthermore, they view efforts to achieve the UN Sustainable Development Goals (UN SDGs) as falling under the purview of governments instead of investors. And, unlike their issuer counterparts, they feel more pessimistic about the ability of ESG strategies to generate returns. Read more

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