Environmental, social, and governance (ESG) issues have become almost universal concerns of major issuers of capital markets securities in the Middle East, North Africa, and Turkey region, according to the findings of an annual survey by HSBC.
A full 97% of issuers in the region who responded to the HSBC 2021 Sustainable Finance and Investing Survey said they had increased the attention that they pay to environmental and social issues over the past year.
And in one of the starkest findings of the survey, 45% of issuers said that they were already seeing the impact of climate change on their business or activities – up from just 7% a year ago.
Gareth Thomas, Regional Head of Global Banking for HSBC in MENAT, said: “The survey results reflect what we are seeing on the ground, that issuers and investors are valuing sustainable finance. The green agenda is here to stay and sustainable finance is pivotal to safeguarding the future of our planet. It is imperative that both investors and issuers in the Middle East continue to engage on the topic to better understand how they can capture the economic as well as environmental and social benefits.”
The annual HSBC survey gathers opinions from more than 2,000 capital market issuers and institutional investors, asset allocators and asset owners worldwide, covering 19 industry sectors.
It showed that 48% of issuers in the Middle East rank environmental and social issues as “very important” and that, while only 6% of issuers have set targets for their net zero commitments, 78% are working towards doing so.
The survey shows that two of the most powerful driving forces for why both regional issuers and investors care about environmental and social issues, is the same belief that it is right to care about the world and society (42%), together with increasing regulatory demands for them to pay greater attention (42%).
The survey demonstrates three clear factors that underpin these influences. For issuers, rising pressure from employees (46%) and customers (40%) to care about these issues, together with regulatory demands (45%), are the main reasons prompting their engagement and commitment.
For investors, regulatory demands (36%) and their belief it is right to care (51%) are primarily underpinning why these issues are important, together with recognition that paying attention to these issues can improve returns and reduce risk (42%).
About a fifth of investors in the region say they have a firm-wide policy on responsible investing or ESG issues and 36% say they intend to develop one.
Investors in the region are, however, experiencing some challenges, which may be slowing their embrace. Top among those issues this year is a shortage of expertise and qualified staff – 44% of investors say this is a problem for them, up from 26% last year.