The 2020 HSBC annual report on sustainable financing and investing shows America’s decisive shift towards green solutions and ESG options
Author: Jessica Sam
America is known for its firm and definite views on environmental issues. They are expeditious in response to matters relating to climate change. Composing some of the largest capital markets, America poses immense influence on all the other financial markets in the world. Lately, America has been drifting towards Environmental, Social, Governance (ESG) options. The HSBC 2020 annual report on sustainable financing and investing displays America’s commute towards a greener economy in the future.
Over the last couple of years, America has been showing strong engagement in sustainable solutions. In 2018, America spent 25% of its total assets (12 trillion USD) on sustainable vehicles. According to the HSBC 2020 survey, around 71% of issuers and 80% of investors in America regard environmental issues as very important whereas, 47 % of issuers and 37% of investors view climate change as a grave threat to humanity.
Investors and issuers in America believe that its capital markets’ push to ESG options were caused by several influences such as external stakeholders, economic views on ESG and engagement of the people. Around 50% of issuers and investors state that they felt pressured to choose ESG options by their employees and clients, though 45% say that they were motivated by NGOs that create climate awareness.
At a majority, 53% of investors say that they felt the responsibility to preserve the environment from investments that may have negative impacts.
Additionally, the effect of the pandemic has created a positive divergence in matters related to sustainability. It has allowed an opportunity to reevaluate and reset the economy for a healthier world. People have become more aware and sensitive to environmental, social and political views. Investors and issuers expound that the change of views on sustainability during the pandemic has impacted their perspective too.
Although there is still some scepticism involved in incorporating ESG options, around over half of the total investors in the Americas believe that ESG can improve the economy. 36% of investors — higher than the global average of investors (28%) believe that opting for ESG solutions can lead to a healthy and prosperous economy and can help America achieve the United Nations Sustainable Development goals for economic stability. So far, 69 per cent of investors have implemented policies on ESG issues.
Furthermore, the HSBC report predicts that America holds great potential for green bonds and sustainability-linked loans. Many investors have shown interest in buying green bonds in the future. The issuers who have not yet opted for green bonds have indicated that they may do so in the future. Additionally, investors and issuers have expressed a desire for better guidance and data regarding ESG solutions from the government and industry professionals.
Nonetheless, America’s perceived significance of sustainable financing and its drive towards ESG options have demonstrated its abundant potential towards a green future.
Image Credits: Photo by Josh Johnson on Unsplash
Reference: gbm.hsbc.com
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