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Rising concerns for climate change to drive sustainable financing in MENAT| HSBC

According to HSBC, 97% of those that responded to the survey highlighted an increase in attention towards environmental and social issues over the past year

By: Business Today Egypt

Thu, Sep. 23, 2021

Around 45% of major issuers of capital markets securities in the Middle East, North Africa and Turkey region have already made note of climate change’s impact on businesses and activities, up from 7% a year ago, states an annual survey by HSBC.

“The survey results reflect what we are seeing on the ground, that issuers and investors are valuing sustainable finance,” explained Gareth Thomas, Regional Head of Global Banking for HSBC in MENAT.

According to HSBC, 97% of those that responded to their HSBC 2021 Sustainable Finance and Investing Survey highlighted an increase in attention towards environmental and social issues over the past year.

“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,” Thomas added.

Over 2,000 capital market issuers and institutional investors, asset allocators and asset owners worldwide answered the survey, covering 19 industry sectors.

Around 48% of Middle Eastern issuers ranked environmental and social issues as “very important,” with 78% working towards net zero commitments while only 6% of issuers have set actual targets.

The belief that it is right to care about the world and society was one of the two most powerful driving forces for why both regional issuers and investors care about environmental and social issues, with 42% agreeing, and 42% noted increasing regulatory demands.

The survey explained 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 a 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 environmental, social, and governance (ESG) issues. With 36% responding that 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.