The bigger the investor, the bigger the ESG focus says HSBC

Larger investors, whether institutions or individuals, are more likely to see the environment and social issues as important in their investment management

The bigger the investor, the bigger the ESG focus says HSBC
Steve Randall

The importance given to environmental and social issues grows in line with the size of the investor.

That’s one of the key findings of a global survey by HSBC which reveals that ESG is considered ‘very important’ by 70% of issuers with revenues of more than US$10bn and investors managing $25bn+. The average across all respondents was 44%.

Two thirds of issuers will seek advice on green matters for capital market transactions in the next 12 months, while the share of investment firms that have a firm-wide ESG policy has increased from 51% a year ago to 59%. This rises to 72% for firms in the Americas.

ESG is a more important matter for respondents in the Americas (80%) than any other region and is up from two thirds last year. Environmental impact on their business or activities has already been noted by 66% of the region’s respondents.

The drivers of ESG focus among those in the Americas include a belief that caring about the world and society is the right thing to do (66%), the potential for better returns or reduced risk (57%), or due to regulatory requirements (44%).

Asked about setting a net zero target, more investors in the Americas said they are making progress than in Asia or MENAT, but Europe leads in this regard. More from this region say they are waiting for the government to lead on this than in any other region.

Skills gap

Among the barriers to adopting a deeper ESG investment strategy is a shortage of expertise or qualified staff.

This is a cross-industry issue but is seen strongly in the finance and investment industry due to the strong demand, the report says.

Greenwashing is an increasing concern for investors, especially among the pension funds and sovereign wealth funds surveyed.