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Financial returns cited as biggest reason for investors’ ESG decision making

Financial returns cited as biggest reason for investors’ ESG decision making

(13 September 2018 - UK) Financial returns and tax incentives are the top two ESG decision drivers across issuers and a majority of investors research from HSBC has found.

Discussion with 1,731 companies and institutional investors in interviews conducted by East & Partners reveals that pension funds and sovereign wealth investors (SWFs) state regulation as their number two driver, behind financial returns. Clear geographical differences exist with companies with USD$10 billion turnover in China and Hong Kong listing supply chain initiatives as their number two driver for ESG financing. In Europe, the UK and Canada company policy, strategy, ESG goals and stakeholder pressure top the list. 

The research, commissioned by HSBC and conducted by East & Partners, shows that 61% of investors and 48% of issuers around the world have an Environment, Social and Governance (ESG) strategy in place – yet wide geographical differences exist. Among issuers, Europe (87%) and the UK (87%) set the pace, particularly among corporates with over USD$10 billion turnover. Hong Kong registers 13%, followed by the US at 21%. For investors, the widest disparity exists between Europe (85%) and Asia (40%).  

Daniel Klier, HSBC’s Group Head of Strategy and Global Head of Sustainable Finance, said: “It’s notable that the driver of increased disclosure has changed since 2017, where 83% of corporate issuers cited investor pressure first, followed by regulation then risk of negative publicity. This shift towards prioritising financial returns illustrates investor engagement has improved and that market forces are encouraging behavioural change. Put simply, ESG, climate finance and risk management are moving mainstream.”  

Read the full report here: https://www.gbm.hsbc.com/esgreport

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