In the global drive towards carbon neutrality, European companies that raise finance in the global capital markets are leading their peers, according to HSBC’s Sustainable Financing and Investing Survey 2021.
It reports that 24% of issuers (16% globally) have already made a net-zero commitment.
The vast majority of issuers in Europe (97%) and across the world (94%) are planning to start transitioning away from environmentally and socially-challenged business models within the next five years, the survey shows.
European investors are demanding that companies make these changes, with almost all (99.6%) saying it’s either “important” or “vitally important” for entities they invest in to be preparing for the effects of climate change.
Almost 11% (23% globally) of those who deem it vital say they will divest themselves of companies that don’t have credible transition plans.
Europe's track record
In their commitment to carbon neutrality, European investors are world leading – 38% have already made a net-zero pledge, compared with 17% of investors globally.
And 91% of European investors (43% last year) say they have a business-wide policy on responsible investing or environmental, social and governance (ESG) issues – the highest percentage of any region.
Among issuing companies in Europe, 27% say their businesses are already being affected by climate change, compared with 50% globally.
Some 72% of European issuers state they are considering reducing or exiting some business activities that could be vulnerable to climate change – the highest percentage of any region globally.
At the same time, 68% of all surveyed companies in the region are considering starting or ramping up businesses that will benefit from climate change.
Colin Bell, CEO of HSBC Bank and HSBC Europe, said: “While the drive towards greater sustainability is a global movement, European investors and issuers are at the forefront, demonstrating across many areas what change can look like.
"The transition to a net-zero global economy will require collaborative and consistent efforts across our economies and societies, with sustainable finance playing a key role. We will continue to support our customers in achieving their growth and sustainability goals.”
Sue Fox (pictured), CEO of HSBC Channel Islands & Isle of Man, added: “The report underlines how ESG considerations are a high and growing priority for investors and issuers alike. Banks such as HSBC are playing an active and central role in progressing the ESG agenda.”
ESG priority
An increasing number of European investors say there is now nothing holding them back from pursuing ESG-based investing – 88% compared to 54% last year. With the global average at 64%, this marks the highest percentage of any region.
Of the 12% who see themselves being held back, 43% say that is down to a shortage of expertise or qualified staff.
European investors still think issuers need to improve their environmental disclosures, with 38% branding them “inadequate”.
They are also concerned about greenwashing, or false claims of environmental benefits, with 66% saying it is a concern.
There are initiatives to create labelling systems to show that certain issues are independently verified as sustainable – for example, in sustainable infrastructure.
Some 64% of European investors said they would be much more confident about investing in sustainable infrastructure if such labelling system was implemented, the survey shows.
• Download the full report here