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Insights from the 2021 sustainable financing and investing survey
19 Plays4 years ago
Capital markets are in the middle of a dramatic transition towards a greener future. What does this shift look like and what does it mean for issuers and investors? In this episode we examine the results of HSBC’s 2021 sustainable financing and investing survey. We look at how the pandemic has changed attitudes towards ESG, what motivates concern about environmental and social issues, what the perceived barriers to ESG investing are and more.
HSBC’s sustainable financing and investing survey charts market sentiment and evolving attitudes to better understand this critical space. It is a comprehensive global survey of 2,000 capital market issuers and investors across 19 industries and based in 34 territories in the Americas, Europe, MENAT, Asia, and ASEAN.
Click here to explore the global, regional and country focused reports.
This podcast is a rebroadcast of a webinar that was originally aired on 15 September 2021.
Hosted on Acast. See acast.com/privacy for more information.
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Transcript
Introduction to HSBC and Global Trends
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This is HSBC Global Viewpoint, your window into the thinking, trends and issues shaping global banking and markets.
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Join us as we hear from industry leaders and HSBC experts on the latest insights and opportunities for your business.
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A heads up to our listeners that this episode has been recorded remotely, therefore the sound quality may vary.
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Thank you for listening.
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Good morning, good afternoon
HSBC's Sustainable Financing Survey Launch
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and good evening.
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Today launches our Sustainable Financing and Investment Survey 2021 at HSBC.
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It's a survey that's been going for five years and today I'm joined by some great guests who are going to deep dive into some of the data sentiments and insight that 2,000 global issuers and investors have responded on over the last couple of months.
Impact of COVID-19 on Financial Practices
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It's obviously been an interesting year and changing headwinds with COVID-19 affecting us all.
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And I'm joined by Alex Lupus, Global Head of Global Investor Access and Co-Head of ESG Sales at HSBC.
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Also joined by Jonathan Drew and Farnam from our ESG Solutions team in Hong Kong and London.
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And also joining us to give you a snapshot of the key findings before we delve into the panel discussion is John Hay, editor of Corporate Finance and Sustainability.
Key Findings from the Sustainability Survey
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at Global Capital.
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We've been partnering with the Euro Money Group on our survey for the last three years, and so he will kick us off today with some of the key stats and editorial findings.
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So with that, I will hand over to John, who's going to run us through some slides, and then we'll get started with the discussion.
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Over to you, John.
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Hello.
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I'm happy to be talking to you about HSBC's Global Sustainable Financing and Investing Survey.
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This year, like last, we've surveyed 1,000 issuers and 1,000 investors, this time in 32 countries, the major economies in North America, Latin America, Europe, the Middle East, and Asia Pacific.
Participants of the Sustainability Survey
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The respondents are a very broad range, from issuers with revenue less than $250 million a year to those with more than $10 billion, drawn from many industries and a similar diversity of investors.
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This year, we're producing a global report as well as regional ones on each of Europe, the Americas, the Middle East, Asia Pacific, and the ASEAN region.
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We've also done deep dive reports on three countries, the US, UK, and China, which ask special questions tailored to those markets.
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With 2,000 responses to several dozen questions, there is a vast amount of data to explore.
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and it shows some very interesting trends in the way corporate and investor attitudes are changing.
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I'm going to give you an introduction to the key findings in the global report.
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Now, our survey last year came in the midst of the coronavirus pandemic.
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It showed a very strong effect.
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87% of investors and 92% of issuers said the pandemic had changed how they saw environmental, social, and governance issues.
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This year, the survey came well over a year after the beginning of COVID, but it was notable that this effect had been sustained.
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84% of investors and 93% of issuers say they've increased the attention they pay to E and S issues in the past 12 months.
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There are a number of forces driving this, but it's clear that it's not just about climate change.
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top of the list, influencing more than 75% of issuers and investors, is the pandemic, followed by becoming more aware of climate change, and then, not far behind, other environmental problems, and a sense that our responsibility to society has changed.
Rise of ESG Consciousness
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As you might expect, this consciousness is strongest in the biggest organisations.
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Our report highlights the contrast between the largest and smallest issuers and investors.
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But the much more important point is the similarity.
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Even the smallest companies and investors are overwhelmingly paying attention to these issues.
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Among investors, those in the Americas and Europe put most importance on environmental and social matters.
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Those in Asia and the Middle East, somewhat less.
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But it's still well over half in every region who think they're important.
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For three years,
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We have also been asking people about the underlying reasons why they care about environmental and social issues.
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The reasons given tend to fluctuate from year to year, but this year is quite a clear picture.
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The most important reason is simply we believe it's right to care about the world and society.
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Nearly 60% of both issuers and investors say that.
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Close behind,
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is that paying attention to these issues can improve returns or reduce risk, meaning ESG is actually a moneymaker.
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This view has been strong among investors for a while, but this year it's increased very sharply among issuers to over 50%.
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The most important change in sustainable finance in the past year has been the huge rise in commitments to head for net zero carbon emissions.
Commitments to Net Zero Emissions
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above all by governments, including the US and China.
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The private sector is heading in the same direction, though somewhat behind, perhaps because companies are accountable to their investors and have to deliver on their promises.
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For the first time in our survey, we included a question on whether issuers and investors are making net zero commitments.
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In both groups, about a sixth of them had.
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But the really significant thing is how many are planning to do so.
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32% of investors and 62% of issuers.
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Investors are notably less gung ho than issuers, perhaps because many are still cautious about how to interpret their fiduciary duty to their clients.
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20% say they will wait for instructions from the government before setting net zero targets.
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In the last few years, most big banks, through both their investment banking and corporate banking divisions, have been trying to reposition themselves to assist clients on their transition journeys, which are now becoming more sharply defined as journeys to net zero.
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It's not always obvious how a bank can contribute.
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However, the survey contains lots of support for the idea that companies do need advice and that banks have a good way to contribute here.
Need for Sustainability Strategy Advice
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Nearly 80% of companies say they need advice and information from others on how to formulate their strategies for climate change and sustainability and how to carry them out.
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Over a third need a lot of advice, and these figures are up from the previous year.
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Some of that might be non-financial advice, but about 72% of issuers want financial and investment support to meet their sustainability goals.
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Within that, 42% of the total say they wanted a lot, sharply up from 2020.
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And in every region, more than half of issuers say they expect to actively seek advice on green, social or sustainability issues in relation to capital markets issues in the next 12 months.
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That rises to over 60% in Europe and the Middle East and more than 70% in Asia.
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About two thirds of companies say that in order to win business from them, their financial, legal and professional advisors need to demonstrate a commitment to sustainability, that this is very important or critically important to them.
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Virtually all the rest say it is moderately important.
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It's clear from the scale of the transition that needs to happen in the economy that there is an enormous amount of investment and financing that will be needed.
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We've all seen the estimates of hundreds of billions or even trillions that need to be invested annually to even get us on track for 2030 goals.
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Sometimes these numbers can seem unachievable as the vast majority of investment is still going into industries that are either part of the problem or not making much difference to climate change.
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But there is encouragement in the survey that both companies and investors are now getting ready for this effort.
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On the corporate side, this is driven by a clear realization that climate
Acknowledgment of Climate Change Impacts
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change is affecting them.
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In the last two years, about 37% of issuers said global warming was already affecting them.
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Now it's 51%.
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Another 30% say it will affect them in the next 10 years, and hardly any think it will only matter in 30 years or longer.
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This year, we refined our question about whether companies expect to start actually changing their business models.
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away from activities challenged by environmental and social issues and towards more sustainable ones.
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We narrowed the focus to ask whether companies expected to do this in the next five years, but also in the next two years.
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About 63% of companies say they will change their businesses substantially or to a noticeable extent in the next five years.
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But remarkably, nearly 45%
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even in the next two years.
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Virtually all companies expect to make at least slight changes.
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It's not just companies that are ready for action.
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Investors, fortunately, have great appetite to increase their investment in sustainable infrastructure.
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Only a quarter of investors say they invest in it already, but another half are interested in doing so.
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And most of those have plans to do it.
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We also asked them which kinds of infrastructure they were most interested in investing in.
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Solar power was the clear leader, with 40% picking it as a favorite.
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There's notably strong interest, too, in water infrastructure at about 30%.
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Likely the result of the extreme rainfall patterns in so many places, with either excessive rain or severe drought, both of which will require better water infrastructure.
Investor Favor for Carbon Capture Technology
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Of the more experimental technologies, the one that attracts by far the most interest is carbon capture and storage.
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It's close behind water as the third most popular choice.
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Energy storage is liked by over 20%, but there is much less interest in gas, only about 10%, and in tidal, hydroelectric, hydrogen and nuclear power, all only about 5%.
Regulatory Increases in Sustainable Finance
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During the time HSBC has been doing these surveys, there has been an enormous increase in regulation in the area of sustainable finance.
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What was essentially an unregulated area has become regulated, first in China and then very strongly in the EU.
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Now, most other large economies are following suit with various rules, including their own taxonomies of what is green.
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One of the main thrusts of that regulation is about disclosure.
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companies disclosing to investors about their environmental and social performance and investors disclosing in turn to their clients and the public about what they're doing to invest sustainably.
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Over the past three years, we've been asking questions about this, and they show that the corporate sector is getting more and more used to environmental and social disclosure.
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There's been a sharp decline in companies that say they don't disclose anything.
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which is now about 5%, down about two thirds since 2019.
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And this year, for the first time, no companies said they disclosed too much already.
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About 40% of companies expect their disclosure to increase, and most of those think it's a good thing, which is similar to last year.
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That group is probably more correct than the 50% who think their disclosure is about right at the moment and don't feel pressure to increase it.
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We also asked investors what would help them most in trying to invest sustainably.
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It was interesting that investors still rely heavily on ESG ratings.
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Their top choice was to have more consistent ESG ratings.
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That was followed quite closely by companies improving their disclosure voluntarily, which came ahead of companies being forced to disclose through regulation.
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Official taxonomies of what is sustainable came after that.
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There are signs that communication between issuers and investors is improving.
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We asked issuers whether they believed investors understood their efforts towards sustainability.
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Last year, only about 42 percent
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felt investors understood their plans and performance well or very well.
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This year, that has leapt to 70%.
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There was more evidence of issuers and investors seeing eye to eye when we asked them about issues to do with being a responsible employer, something that is widely felt to have gained a lot of attention since the pandemic.
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We asked issuers whether they felt pressure from investors to act responsibly
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on issues such as human rights in the supply chain, gender and ethnic equality in the workforce, fair pay and good staff training.
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Between 60 and 70 percent of issuers said they did feel investors wanted them to work harder on all of these issues.
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And it was even higher for health and safety, nearly 90 percent.
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That tallies with the responses from investors.
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Between 60 and 70% of them
Concerns About Greenwashing
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say they take these issues into account when making investment decisions, and half of those say they actually monitor companies' performance and ask them to improve.
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Part of the point of disclosure is to combat greenwashing, the tendency to claim things are greener than they really are.
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We asked investors whether they were worried about greenwashing, and the results were interesting.
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In Asia and Europe, about two thirds of investors are either very worried or somewhat worried about it.
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It's slightly lower in the Middle East, about 50%.
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But in the Americas, concern about this issue is sky high.
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About 85% are worried, including 64% who say they are very worried.
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The concern may arise from the politically contested nature of ESG issues, notably in the US.
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and the fact that to many investors, this is still a new area where they have not found their feet yet.
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The likelihood is that the US will follow Europe with a significant increase in regulation of sustainable finance, partly to address concern about greenwashing.
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A very encouraging sign in this year's survey is that barriers to ESG investing are coming down.
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We've been asking a question about this for the past three years.
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Is anything holding your organization back from pursuing ESG investing more fully and broadly?
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In 2019, 60% said obstacles were holding them back.
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That fell to 46% last year.
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This year, it's only 36%.
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And among the investors who do see obstacles, the reasons are changing.
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Last year, two of the main problems were lack of comparability of ESG data among issuers.
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and poor financial returns.
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Those have receded this year.
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But three problems have been increasing year on year.
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Above all, shortage of expertise or qualified staff, which has gone up from 27% to 37% in two years.
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So now back to Hayley Ford, who's going to moderate the discussion.
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Thanks, John, for covering some of those key findings.
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There's lots of stats there that we can springboard into the discussion from.
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So perhaps I'll come to our panellists first and Alex, I'll start with you.
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What did you find interesting and actually quite surprising with some of the stats?
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I guess I'll start with what's encouraging.
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It seemed like there was a real change and while COVID has been a really difficult global phenomenon and
00:17:36
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It's actually galvanized change.
00:17:39
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And there seems to be a collective recognition of the effects of climate change in this year's survey.
00:17:45
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And almost all issuers, I think the stat was 94%, John, correct me if I'm mistaken, that will change their business models in response to this in the next five years.
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So there's a collective recognition of the problem and there's a collective recognition that there's something that everyone can do about it.
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We're seeing a change, a collective change, and it seems like the pandemic has actually just driven everyone a bit closer together and driven a sense of urgency.
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But it's not just about doing the right thing for values-based.
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John, you said it yourself, it's a moneymaker as well, and people see opportunity here as well.
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So for me, I was actually quite encouraged by the results from the survey.
00:18:22
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Jonathan or Farnham?
00:18:24
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I fully agree with that.
00:18:25
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I mean, that was very positive and encouraging to see.
00:18:28
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I guess, on the other hand, there was some interesting kind of contradictions or conflicts in the ways in which investors and issuers spoke about disclosure.
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So you can see from the responses of many issuers that they're sort of comfortable with the level of disclosure that they're making right now.
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They think they're doing a good job of getting their message across.
00:18:50
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And yet from investors, you know, a pretty sizable chunk of investors saying that environmental disclosure is not good enough.
00:18:57
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So, I mean, that resonates very strongly with what we've been hearing from clients, both issuers and investors.
00:19:02
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And it was interesting to see it play out in the responses as well.
00:19:05
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John, one of the things I noted of interest in the results was some of the answers to the questions around timing in terms of when are people taking action, when are people expecting to see impacts?
00:19:17
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And if I pick the numbers up, half of issuers saying climate change is impacting their business already.
00:19:24
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Yeah.
00:19:24
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more than 60% of investors saying they think that climate change is impacting the companies in which they are investing.
00:19:32
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So this sort of recognition that climate change that many previously might have said, well, that's way off in the future is seen very much as a current event actually impacting.
00:19:43
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So clearly a very strong focus around on climate, but also the urgency of
00:19:51
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both the impacts and also the urgency of the need to take action now.
00:19:57
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I agree, Jonathan.
00:19:57
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I would also say that there was one stat that came up in reading the survey that 77% of investors say that companies must have plans to transition to low carbon.
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and 23% will divest from those companies.
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So it's really about holding the companies accountable to those plans.
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And I think that interplay between the issuer and the investor side, particularly, and I think the results even showed, John, correct me if I'm mistaken, but it's really been driven by the asset owner side as well.
00:20:24
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And so they will be also looking to divest in companies that don't have a really defined low carbon transition plan.
00:20:30
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Yes, I think that the divestment percentage, though it's a minority, is significant.
00:20:37
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And issuers should definitely pay attention to that.
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The action is really going to begin now.
00:20:42
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If we think about net zero and how that's come into the conversation in the past year or two, this is really still quite new.
00:20:51
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And next year and the year after, net zero are going to just soar in importance.
00:20:57
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in our survey and in all the discussions between issues and investors.
00:21:03
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So there's obviously a quarter of investors saying that they will divest Alex, you referenced that.
00:21:09
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But what does that mean, particularly for those stickier carbon intensive sectors, if they do divest, you know, and the transparency that we're all trying to achieve?
00:21:18
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So, Jonathan, I'll throw that one to you.
00:21:21
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This is a critical issue, Hayley, because, and there's a very important balance to get right here, because as the survey is showing, if the
00:21:32
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If an issuer is not showing that they are committed to the transition to supporting the global effort, then they are absolutely at risk that investors will
Challenges in Divesting from High-Carbon Sectors
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shift away.
00:21:42
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But I think that has to be balanced also when one looks at some of the high carbon sectors, which principally, you know, we still have a large part of our energy systems that rely on the burning of fossil fuels.
00:21:59
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And in a sense, those getting the transition pathways for those right, recognizing that this is not a flick of a switch, that this is actually a multi-decade transition.
00:22:11
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And actually there is capital required in a sense to support many of those entities, because those will be the same entities who are actually going to have to take a very significant responsibility in investing in the new forms of energy
00:22:28
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the low carbon solutions to actually displace and replace and affect the transition away from their core and historic business.
00:22:36
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So I think getting this balance right is actually going to be critical.
00:22:41
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I think certainly as a
00:22:43
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you know as a commercial bank we know we stand very much in the in in in the middle of this through the multiple roles that we play and the simple divestment solution well there isn't a simple divestment solution it's a very complex analysis of in a sense you know the issue has sort of intentions and capabilities and resources um to to affect that that that transition but it's going to be the big story of the next couple of decades
00:23:11
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And if I may, I think in the responses, you know, there was that really interesting kind of sector breakdown when asking around where ESG can be a competitive differentiator.
00:23:22
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And if you look at the sectors that are most aware of that, you know, transport, metals and mining, I mean, these are those difficult, hard to abate sectors in particular areas.
00:23:31
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that understand that their ability to communicate to providers of capital, the transition trajectory that they're on is increasingly becoming a competitive differentiator for the company itself.
00:23:44
Speaker
Yes, I don't think companies should fear divestment, but I do think they need to pay attention to it.
00:23:51
Speaker
And what this means is you can't keep your head in the sand.
00:23:56
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You have to be focused on transition
00:23:59
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That is what investors want to hear.
00:24:02
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And in my experience, investors, they love a turnaround story.
00:24:06
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They want forward-looking stories of how companies are going to progress and change and adapt to the future.
00:24:13
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I think the key is also to having significant milestones and meeting those milestones.
00:24:17
Speaker
And that's where I think the investors will hold them accountable.
00:24:20
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I guess it's more than talk is follow through with action and removing the tracks and putting the pedal to the metal now and delivering on this.
00:24:27
Speaker
And Farnam, I expect you see that in the bond market, don't you?
00:24:29
Speaker
With the expectations of investors changing.
00:24:36
Speaker
when they meet issuers?
00:24:37
Speaker
Yeah, absolutely.
00:24:38
Speaker
I mean, you see it in a lot of different ways.
00:24:39
Speaker
I mean, you see it in the way that investors have embraced sustainability-linked bonds and the fact that over the course of this year, we've seen about $50 billion in sustainability-linked bond issuances.
00:24:50
Speaker
I think...
00:24:51
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the structure of a sustainability-linked bond in terms of tying the characteristics of the bond to certain sustainability performance targets matches very nicely to, as Alex points out, the need for short and medium-term targets to demonstrate that transition trajectory.
00:25:08
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I think you also see it in the green bond market because you see it in the fact that
00:25:13
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The number one question we hear now when investors are meeting with issuers of green, social, or sustainable bonds is, how does this framework align to your broader business strategy?
00:25:22
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How does this framework demonstrate where you're moving as a company?
00:25:27
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When we market green or sustainable bonds with banks, the key question that investors are asking is, well, how much of your balance sheet is reflected by your green and sustainable assets?
00:25:37
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how do you see that changing over time?
00:25:39
Speaker
So I think that's already been integrated.
00:25:43
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Even where we have labeled products, the focus of investors has broadened out quite a bit to better understand the transition trajectory.
00:25:52
Speaker
And one of the new questions this year was obviously the labelling on sustainable infrastructure, Jonathan.
00:25:59
Speaker
So 5% feeling they can positively do that or feel comfortable doing that.
00:26:05
Speaker
But that kind of skyrocketed up to 50% and then 70% when you looked at the strength of the sentiment with the fast infralabel.
00:26:12
Speaker
So if you could share your thoughts on that and the kind of implementation of it as we get up to COP.
00:26:17
Speaker
Yeah, well, it's I mean, it is a really interesting stat and a really a standout one.
00:26:23
Speaker
I mean, and I think a very positive one, I think first is sort of the recognition of the importance of
00:26:31
Speaker
delivering, you know, a sustainable economy.
00:26:35
Speaker
Obviously, you've got energy in there.
00:26:37
Speaker
And that's probably the part that most people would most readily focus on.
00:26:41
Speaker
But also, you know, we're not going to see the transition objectives met unless, you know, that transition happens in other sectors, transport, obviously, another key, and the provision of mobility services, but also, and John, you raised the point, you know, sort of environmental services and water.
00:27:01
Speaker
which are in a sense threatened and put into jeopardy by climate change as we see changing meteorological patterns and so forth.
00:27:10
Speaker
Investment is needed there to make sure that those resources are where they become constrained, that they're better managed, better used, more
00:27:21
Speaker
efficiency so very encouraging to see the increased importance of that the strong investor appetite and interest to invest and of course into your question specifically Hayley obviously the the need for assessing the complex environmental impacts of infrastructure
00:27:44
Speaker
to be addressed and if we're to move and drive more capital there and create it as a much stronger asset class, more investable, then the labelling system I think is hugely important and it's very encouraging to hear, as John said, to hear investors sort of backing our hunch a little bit on that one.
00:28:09
Speaker
Because it's not just about decarbonisation,
00:28:11
Speaker
You know, it's around managing impacts.
00:28:13
Speaker
It's aligned to sort of the do no significant harm that we're seeing now.
00:28:18
Speaker
So, you know, a massively important sector.
00:28:21
Speaker
I'd like to add as well, one challenge which we haven't spoken about really is poor financial returns being cited as a reason for, as a barrier for investing, because that seems to have been, have dropped significantly off, John, in the last few years as performance, you know, as people see this as outperforming and a strategy for outperformance as a way to not only improve returns, but reduce risk.
Decreasing Barriers to ESG Investing
00:28:41
Speaker
And we've seen that through the pandemic, that it tends to be the quality companies that have integrated ESG into the way they've done this and sustainability.
00:28:48
Speaker
And so those barriers in terms of investing in ESG seem to be going away, which is really encouraging.
00:28:55
Speaker
Yeah, I mean, the economy is changing and society is changing.
00:28:59
Speaker
And there's absolutely no point being stuck in the past and trying to pick the best companies for yesterday's world.
00:29:10
Speaker
Tomorrow's world is going to be different.
00:29:12
Speaker
And the main ways it's going to be different are to do with the environment and society.
00:29:18
Speaker
And investors just simply have to pick the companies that are best fitted for that future.
00:29:25
Speaker
And interesting as well, obviously, to see, I think, number one on the constraints was a shortage of talent, John.
00:29:30
Speaker
Was that right?
00:29:31
Speaker
Yeah.
00:29:32
Speaker
Well, yeah, and I think this is not at all surprising.
00:29:36
Speaker
I mean, and I'm sure everybody on this call will agree with it, actually, because, you know, you only have to look on LinkedIn to see the hundreds and thousands of people now who have sustainability in their job titles, which simply didn't exist before.
Demand for Sustainability Expertise
00:29:52
Speaker
And, you know, it's a tremendous thing that the employment market has managed to find these people and train them.
00:29:58
Speaker
And but but the you know, the demand is is going to outstrip supply for a very long time to come, I think.
00:30:05
Speaker
I think number two is regulatory constraints.
00:30:09
Speaker
Anything in the survey that might tell us more about that?
00:30:12
Speaker
As you talked about sort of stuck in the past, is this people saying the sort of regulations on things like capital allocations are somehow too much backward looking?
00:30:23
Speaker
Any thoughts on that item?
00:30:29
Speaker
Well, we've not been able in this survey to distinguish between people who are put off by sort of old regulation that they feel makes it difficult for them to do sustainable investing and those who are put off by new regulation, which is the sustainable finance regulation, which might make it seem daunting or complicated.
00:30:53
Speaker
But I think the fact that this...
00:30:57
Speaker
indicator is rising and has risen consistently for three, you know, well, for the last two years, suggests to me that, you know, increasingly, this is the sort of burden of sustainable finance regulation that people are a bit scared of.
00:31:12
Speaker
But it shouldn't be seen as something that needs getting rid of, because people will just get used to it.
00:31:18
Speaker
It's hard to keep up with, especially now when new rules are coming in all the time.
00:31:22
Speaker
But people will learn them.
00:31:24
Speaker
You know, advisors will get better at helping people with them and simplifying them.
00:31:30
Speaker
And of course, what is all this regulation?
00:31:33
Speaker
Most of it is addressing the other concern, which is disclosure.
00:31:37
Speaker
So people want better disclosure.
00:31:39
Speaker
And the way to get that is regulations that make it mandatory.
00:31:44
Speaker
Farhan, one of the steps I just wanted to perhaps kind of
00:31:49
Speaker
pause on before we run out of time was the spike in actual issuers wanting to tap the capital markets over the next 12 months kind of globally at 61% and actually a slightly more distributed weighting into social not just environmental so is that what you're seeing on the ground and
00:32:09
Speaker
kind of to Alex and Jonathan, you know, with your investors and corporate engagements in Asia and
Pandemic's Social Impact on Debt Markets
00:32:15
Speaker
elsewhere?
00:32:15
Speaker
Yeah, absolutely.
00:32:17
Speaker
I mean, I think this has been one of the observable impacts of the pandemic on debt capital markets in particular has been the growth and social impact.
00:32:26
Speaker
There was a fear that that was going to be a sort of one off in the wake of the pandemic.
00:32:31
Speaker
But actually what we saw was that it had longer term implications in terms of issuers setting up frameworks that they continue to issue under.
00:32:40
Speaker
I think the Republic of Chile is a great example of this.
00:32:43
Speaker
You know, they were originally a green bond issuer.
00:32:45
Speaker
the wake of the pandemic, they expanded their framework to include social.
00:32:49
Speaker
Now all of their issuance effectively is green or social.
00:32:52
Speaker
So I think that's been the trend on the issuer side and equally on the investor side.
00:32:57
Speaker
There's a much more nuanced understanding of what makes a strong social framework.
00:33:04
Speaker
You have investors looking for specific things when it comes to impact reporting as well.
00:33:08
Speaker
And so that engagement on social frameworks ends up also spurring on issuers to
00:33:14
Speaker
look at most social more favorably.
00:33:18
Speaker
So it's not just a sort of nice to have, but rather it's something that really can deepen your engagement with your investor base.
00:33:23
Speaker
I did sort of pick up one area in the pool, which is slightly less encouraging, John, which is investors looking to invest in progressive companies.
00:33:35
Speaker
But it seems only 20 something percent
00:33:38
Speaker
thought gender equality was very important.
00:33:41
Speaker
Only 19% thought ethnic equality was very important.
00:33:47
Speaker
And only 19% were thought that human rights were very important.
00:33:52
Speaker
And I just wonder whether there's, have we slipped a bit here?
00:33:56
Speaker
Is there something else in the survey that shows that, you know, although pandemic has raised
00:34:02
Speaker
the awareness, but some of the sort of that seemed a low number to me.
00:34:08
Speaker
I'm just wondering what else the survey brought out that, you know, just sort of balances that.
00:34:14
Speaker
Yeah, I mean, that's a good point, actually, Jonathan.
00:34:18
Speaker
And I mean, I think I would say that the survey shows people are paying attention to this.
00:34:25
Speaker
The question is how, you know, how sort of assertive
00:34:30
Speaker
And concerted is their attention.
00:34:33
Speaker
I mean, you know, if you look at the, you know, it's over 60% that say they take these issues into account when making investment decisions.
00:34:44
Speaker
Okay.
00:34:44
Speaker
Which is, you know, arguably quite a lot.
00:34:48
Speaker
When, you know, not very long ago, investors cared about just cash flow profits and assets and things like that.
00:34:56
Speaker
But you're right that, you know, from another perspective, you know, not many of them are actually monitoring companies' performance in this area.
00:35:07
Speaker
And it will be interesting to see if that improves or sort of increases in coming years.
00:35:12
Speaker
And I think we can expect that it could well.
00:35:16
Speaker
Could it also be, John, that just environmental issues have been at the fore recently and there's just more attention on that at the moment and we can see that the social issues will rise in importance and more monitoring over time?
00:35:27
Speaker
I think definitely.
00:35:29
Speaker
I mean, if you think about it, environmental issues are, you know, quite likely to be existential for quite a lot of companies.
00:35:39
Speaker
You know, issues like fair pay,
00:35:41
Speaker
though they are important and do affect companies licensed to operate and their sort of perception, the market and so on, they're not probably existential threats in the short term.
00:35:53
Speaker
So investors, that's probably why they might be less worried about them.
00:36:00
Speaker
But I think the data issue is also worth looking at because if you're an investor, right, and you've got 500 companies in a portfolio,
00:36:10
Speaker
And you want to think about fair pay.
00:36:13
Speaker
Well, how do you determine which of those companies provide fair pay?
00:36:19
Speaker
It's a difficult thing to measure.
00:36:21
Speaker
It can be interpreted in many different ways.
00:36:23
Speaker
And you need information to make those judgments.
00:36:26
Speaker
So until you have that information, it's quite difficult to monitor the companies and ask them to improve.
00:36:33
Speaker
Thanks, John.
00:36:34
Speaker
I think that is a passing comment for our audience to ponder on, and I'm sure something that as the report lives on, we can dig a little deeper too.
00:36:44
Speaker
I'm conscious that we're up on the hour.
00:36:45
Speaker
I'd firstly like to thank John and the team at EuroMoney for all the amazing work on the Insight 2000 responses across, I think it's 34 years.
00:36:57
Speaker
territories is an amazing amount of work.
00:37:00
Speaker
So thank you very much.
00:37:01
Speaker
And also to Jonathan Farnham and Alex who are joining us quite late at night in Australia, from Hong Kong and also in London today.
00:37:09
Speaker
So with that, I will say thank you.
00:37:12
Speaker
Goodbye and stay safe till next time.
00:37:14
Speaker
Thanks everyone on the call.
00:37:16
Speaker
Thank you for listening today.
00:37:18
Speaker
This has been HSBC Global Viewpoint, Banking and Markets.
00:37:22
Speaker
For more information about anything you heard in this podcast,
00:37:25
Speaker
or to learn about HSBC's global services and offerings, please visit gbm.hsbc.com.