The 2019 Sustainable Financing and Investing Survey, published by HSBC, found that 56% of issuers in the region are already being affected by global warming and that, uniquely to the Middle East, not a single issuer thinks they will be safe from the effects of climate change for the next 30 years.
Middle Eastern issuers do not plan to sit still. The report shows that 86% plan to move capital over the next five years either from activities challenged by environmental and social issues, or towards activities that promote positive environmental or social outcomes. This scored substantially more than the next closest region, Europe, where 69% expect to move capital.
The study showed that climate change is understood as a real and present danger by issuers in the Middle East, and that they are incorporating climate change and sustainability goals into their decision-making and strategies.
Sabrin Rahman, Regional Head of Sustainability for Middle East, North Africa and Turkey at HSBC, says: “The 2019 Sustainable Financing and Investing Survey demonstrates that issuers in the region are well aware of the impacts of climate change.”
More importantly, the survey shows that issuers and investors are incorporating sustainable-focussed targets into their plans, and of particular significance is their enthusiasm for green debt instruments.
This awareness of climate change means most issuers in the Middle East have both a strategy for reducing their environmental impact and one for ensuring they have a positive bearing on society.
The report shows that there is a high level of interest in ESG-linked (Environmental, social and corporate governance- ESG) loans in the region, with a combined 94% of issuers saying the product sounds either ‘very interesting’ or ‘potentially interesting’.
However, Middle Eastern investors report the highest regional perception of obstacles to pursuing ESG investing more fully and broadly: 77% versus 61% globally.
According to investors, the region’s biggest hurdles are: lack of ESG data comparability between issuers (54% compared to 26% globally); a shortage of expertise or qualified staff (46% compared to 27% globally); or a lack of demand from clients (41% against 20% globally).
The report also showed that Middle Eastern investors are particularly positive about labelled green, social and sustainable bonds. Almost half of investors in the region – 49% – report that they will start buying these instruments seriously for the first time in the next two years, while a further 19% will increase their investments.
Click here for access to the global and Middle East reports.
Over 1,300 completed responses were received. This comprised 500 issuers and 500 investors, distributed across 15 target markets in four regions. The Middle East included 70 issuers and 70 investors, split evenly between Saudi Arabia and the UAE.
HSBC is the largest and most widely represented international banking organisation in the Middle East, North Africa and Turkey (MENAT), with a presence in 9 countries across the region. In the year ending 31st December 2018, HSBC in the MENAT region made a reported profit before tax of $1,557 million.