The 2020 HSBC annual report on sustainable financing and investing shows Canada’s strong commitment to sustainability
Author: Jessica Sam
Canada is known for some of its prominence in the financial sector. Harbouring some of the world’s largest tech hubs, Canada has demonstrated its excellence in innovation and technology. Canada has consistently expressed its allegiance to environmental issues and sustainability over the years. The HSBC 2020 annual survey discloses Canada’s vigorous drive to sustainable financing and investing whilst also unfolding some key issues and obstacles that may cause inconvenience in achieving a sustainable future.
Canada’s National government has devoted itself to a clean and low-carbon economy and adopted Pan-Canadian Framework for Clean Growth and Climate Change strategy in 2016. Sustainability as a concept has received paramount recognition in Canada. In the HSBC survey of 180 market participants, Canada’s views on sustainability are evident. A whopping 98% of issuers have taken due action to become more sustainable. While 38% are working to become more sustainable, 45% have started placing sustainability targets. 13% of issuers have already had a plan of action to reach net-zero carbon emissions.
However, the investors in Canada are still at the starting stage in sustainability. Only 10% of all investors have fully taken sustainability into account in the decisions whereas, 58% take sustainable actions some of the time. However, the majority of 32% who have not taken any approaches towards sustainability tend to do so in the future.
While these percentages may seem promising for Canada’s sustainable future, there are still some obstacles in its path. The central issue that the investors and issuers conveyed was data and disclosure. A solid 48% of investors and 19% of issuers have expressed that they see challenges in adopting sustainability due to a lack of data on its long-term impacts.
Both issuers and investors have expressed their grievances on scarce, vague and unclear information on sustainable financing. Among the participants who face obstacles, 65% of issuers have stated that the data on investment opportunities in sustainable financing is indeterminant and insufficient.
Consequently, the Canadian market participants have expressed their need for better information and guidance on sustainability strategies and Environmental, Social, Governance (ESG) options. Most of the issuers have reported that they need more information on sustainable investors from banks and advice on clean technologies. Additionally, a few have expressed their guidance for issuing green bonds and insights on investments that could make them more sustainable. Investors, on the contrary, have requested more information on green deposits, sustainability-linked loans, green bonds and asked for guidance on specific financial instruments.
Both issuers and investors want more emphasis and effort on mitigating air pollution, plastic pollution and environmental impacts of agriculture from the government. Although challenges may lay in Canada’s path, their importance of sustainability has not wavered. Issuers and investors believe addressing the obstacles in data and disclosure can indefinitely prompt Canada’s journey in sustainable financing.
Image Credits: Photo by Igor Kyryliuk on Unsplash
Reference: gbm.hsbc.com
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