14 October 2020

Americas capital market participants more committed to ESG than global counterparts

Capital market participants in the Americas are more committed to focusing on ESG principals than their global counterparts, with nearly two-thirds of the region’s investors regarding ESG issues as very important, compared to only 48% globally.

On the sell-side, the embrace of ESG among Americas issuers is even stronger than investors. Seven–in-ten (71%) issuers say ESG is very important, versus six-in-ten globally, with eight-in-ten among US issuers, according to the HSBC Sustainable Finance and Investing Survey 2020.

The region’s positive stances on environmental and social issues have been highly influenced by a range of internal and external factors including clients or customers, employees, regulators, NGOs and broader communities. This influence has manifested itself in broad adoption of firm-wide policies on responsible investing and/or ESG issues and above-average scrutiny of ESG credentials.

Nearly two-thirds of capital markets participants in the Americas believe that caring about ESG issues will elevate their overall performance.

“Sustainable finance has moved into the mainstream of the capital markets faster than we expected, and as that happens, ESG deals are increasingly being judged as a traditional asset rather than a reflection of commitment to social and environmental issues,” said Daniel Klier, global head of sustainable finance, HSBC. “This is an optimistic development, as ultimately the long-term success of the market will be shaped by the ability of ESG investments to compete with other traditional options on risk and return.”

Additionally, the events brought on by the COVID-19 pandemic have reinforced the focus on ESG as nearly half of Americas investors (42%) now regard resilient supply chains as having greater importance than before the pandemic, against a global average of 32%.

“For people around the world, COVID-19 has had a profound impact on attitudes about environmental, social and sustainability issues,” said Christian Deseglise, global head of sustainable finance, HSBC Global Banking and Markets. “The Americas have been hard hit by the pandemic and economic aftershocks, and on a wide range of issues, issuers and investors in this hemisphere say their stances on ESG have shifted significantly, even more than those of their peers elsewhere in the world.”

In a recent report, HSBC Global Research noted that stocks of large companies with stronger ESG ratings have outperformed the global average by 4.7% since mid-December 2019. For climate-related stocks the gap is even bigger, with performance 13% greater than the global average over the same period.

Additional notable trends in shaping sustainable finance within the Americas as identified in the report include:

  • Unmatched certainty on the urgency of climate change — 47% of issuers and 37% of investors regard this as the most important threat to humanity, compared with global averages of 29% and 32%.
  • Most investors believe caring about environmental and social matters can improve investment returns and/or reduce investment risk — 63% agree with this, whereas it is a minority view in all other regions.
  • The majority of both issuers and investors want more advice on ESG questions — 74% of the former and 58% of the latter, each outstripping peers in all other regions. Appetite is particularly strong among investors in Canada, with 64% of them expressing interest, compared to a global average of 51%.
  • Issuers and investors are committing to green and socially responsible debt more than elsewhere. The Americas has many potential issuers (48%), first time investors (42%) and existing buyers (17%); and above average scores for green and sustainability-linked loans.

About the report
The report surveyed 250 issuers and 250 investors across Argentina, Brazil, Canada, Mexico and the United States, on their changing attitudes to sustainability issues. The global survey covered 1,000 issuers and 1,000 investors across 34 countries. Research was conducted by GlobalCapital and Euromoney Insight for HSBC between July and August 2020.

The global report and regional reports for Asia Pacific, Americas, Middle East and European be accessed here: http://gbm.hsbc.com/solutions/sustainable-financing

HSBC Holdings
HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. HSBC serves customers worldwide from offices in 64 countries and territories in our geographical regions: Europe, Asia, North America, Latin America, and Middle East and North Africa. With assets of US$2,923bn at 30 June 2020, HSBC is one of the world’s largest banking and financial services organisations.