Rising ESG concern drives push for sustainable financing in Middle East

A full 97% of issuers in the region who responded to the HSBC 2021 Sustainable Finance and Investing Survey said they had increased the attention that they pay to environmental and social issues over the past year


Dubai – Environmental and social issues have become almost universal concerns of major issuers of capital markets securities in the Middle East, North Africa and Turkey region, according to the findings of an annual survey by HSBC.

A full 97% of issuers in the region who responded to the HSBC 2021 Sustainable Finance and Investing Survey said they had increased the attention that they pay to environmental and social issues over the past year.

And in one of the starkest findings of the survey, 45% of issuers said that they were already seeing the impact of climate change on their business or activities – up from just 7% a year ago.

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

The annual HSBC survey gathers opinions from more than 2,000 capital market issuers and institutional investors, asset allocators and asset owners worldwide, covering 19 industry sectors.

It showed that 48% of issuers in the Middle East rank environmental and social issues as “very important” and that, while only 6% of issuers have set targets for their net zero commitments, 78% are working towards doing so.

The survey shows that two of the most powerful driving forces for why both regional issuers and investors care about environmental and social issues, is the same belief that it is right to care about the world and society (42%), together with increasing regulatory demands for them to pay greater attention (42%).

The survey demonstrates 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 ESG issues and 36% say they intend to develop one. This is particularly the case in Saudi Arabia and the UAE where 22% of investors say they have a policy in place, which is higher than the regional average.

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.


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HSBC Sustainable Financing and Investing Survey 2021

The HSBC Sustainable Financing and Investing Survey 2021 is an annual global survey of 2,000 capital market issuers and institutional investors. The survey was run during May and June and was designed and executed by Euromoney Institutional Investor PLC. Respondents were split evenly between issuers, from across 19 industries, and institutional investors, including asset allocators and asset owners. In total, respondents were based in 34 territories across the regions of Americas, Europe, Middle East, Asia-Pacific, and Asean. The global report and regional reports for Asia Pacific, Americas, Middle East and Europe can be accessed here: https://www.gbm.hsbc.com/en-gb/campaigns/sfi-survey 

HSBC in the MENAT region

HSBC is the largest and most widely represented international banking organisation in the Middle East, North Africa and Turkey (MENAT), with a presence in nine countries across the region: Algeria, Bahrain, Egypt, Kuwait, Oman, Qatar, Saudi Arabia, Turkey and the United Arab Emirates. In Saudi Arabia, HSBC is a 31% shareholder of Saudi British Bank (SABB), and a 51% shareholder of HSBC Saudi Arabia for investment banking in the Kingdom. Across MENAT, HSBC had assets of US$68.9bn as at 31 December 2020.

HSBC’s climate commitments

In 2020 HSBC announced an ambitious plan to prioritise financing and investment that supports the transition to a net zero global economy:

  • Committing to align its financed emissions – the carbon emissions of its portfolio of customers – to the Paris Agreement goal to achieve net zero by 2050 or sooner.
  • Supporting its customers in all sectors with between US$750bn and US$1 trillion of finance and investment by 2030 to help with their transition.
  • Applying a climate lens to financing decisions.
  • Unlocking new climate solutions by creating one of the world’s leading natural capital managers, creating a US$100m venture debt fund for CleanTech innovation, and launching a philanthropic programme to donate USD100m to bring new solutions to viability and scale
  • Aiming to be net zero in its operations and supply chain by 2030.

HSBC’s history of sustainable finance

The bank’s ambitious climate declaration builds on its leadership in sustainable finance and addressing climate change.

  • In 2020 and 2021, HSBC was named the World’s Best Bank for Sustainable Finance by Euromoney and the Middle East’s Best Bank for Sustainable Finance, which noted that “across every sector and region HSBC stands out for its commitment to developing partnerships and products that will bring finance at scale to create a more sustainable and resilient planet.”
  • HSBC has been ranked a leading research house in ESG (Environmental, Social and Governance) for the past five years, according to external surveys that include Extel and Institutional Investor.
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