HSBC survey reveals a common goal hindered by a gap in focus for sustainable investment opportunity
Going green is the destination but it seems Canadian investors and issuers are on slightly different routes to get there.
Sustainable investments are surging in popularity but a new report from HSBC Bank Canada suggests a mismatch between the investments favoured by issuers and those investors want.
Over 80% of Canadian issuers report no obstacles to investing in the country’s green and sustainable economy – and 98% of Canadian issuers are already factoring sustainability into their activities.
But 48% of investors report obstacles like lengthy funding commitments and a third do not factor sustainability into their decision-making. That said, almost 6 in 10 of those investors plan to start doing so.
Asked about specific sustainable investments, there is commonality including energy-efficient buildings, sustainable public transport, and renewable energy sources. Both investors and issuers agree that these are keystones of greener infrastructure investment.
However, there are gaps.
“Solar power is the top investment opportunity among issuers, but ranks at the bottom among investors,” said Dan Leslie, SVP & deputy head of commercial banking for HSBC Bank Canada. “It is the exact opposite when looking at hydrogen as an investment opportunity, indicating a mismatch between issuers and investors.”
Better guidance required
Both investors and issuers agree that guidance is essential to informing sustainable investment decisions.
Investors want to learn more about financial products like social bonds and green deposits, while issuers are keen to find ways to market their sustainability stories.
The survey also highlights a desire for sustainability in supply chains but only 8% of Canadian companies (issuers) currently rate their suppliers on ESG.
“Looking ahead, despite the COVID-19 pandemic, social issues do not yet appear to have gained as much focus. As environmental initiatives are gaining steam, the next stage for Canadian market participants is likely to be devoting more attention to social issues in their financing and investing approaches,” added Leslie.
