Will the sustainability goals of financial firms be the next to perish as rates rise?

Beijing: Six out of ten financial experts involved in environmental, social and governance (ESG) decision-making believe rising costs will hinder the sustainability strategies of the companies in which they invest, according to a survey by HSBC.

HSBC analysts led by ESG research head Chan Wai-shin said in a report on the survey released on Wednesday that rising costs generally have a negative impact on sustainability as a higher interest rate environment could make it more expensive. Borrowing money for businesses and motivating them to spend less on issues such as sustainability.

In its third ESG sentiment study of the year, HSBC surveyed 352 financial professionals from around the world who were involved in ESG decision-making. They represented 329 institutions and $10 trillion in assets under management. The survey was also conducted by the bank in February and June.

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Inflation will constrain corporate sustainability strategies in the short term, according to about 34% of respondents, while 25% believe it will do so in the long term. Only 14% of respondents thought that increased costs would drive businesses to adopt sustainability strategies.

"It makes sense in terms of diverting resources to deal with material sourcing and wages that may need to be addressed in the short term, rather than focusing on long-term issues such as sustainability," Chan said.

The survey was conducted by London-based research firm Survive between October 4 and November 3, with the aim of determining where customers stand with respect to their ESG strategies, pace of growth and future intentions. A little over 15% of respondents were based in Asia, and another 21% had a business there.

Since ESG is now so ingrained, there will be less to incorporate in the future, Chan said, adding that the intention to incorporate it has reached a turning point.

ESG issues are now more fully rated in stocks than they were a year ago, according to 52% of respondents, who made up the majority of the sample.

Leaders of businesses may sometimes resort to short-term decision-making as they deal with rising costs and unclear market conditions, according to law firm Baker McKenzie's Race to Net-Zero report, which was released Monday.

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In a survey conducted by the law firm of 1,000 sustainability leaders and general counsels in nine international markets including Hong Kong, mainland China and the United States.

Nearly 70% of respondents said that significant upfront costs were a barrier to businesses achieving their net-zero goals. 58% of respondents claimed that their organizations had not allocated nearly enough funds to successfully complete the transition.

In a separate study published on November 8, the non-profit Business Environment Council (BEC) and Schneider Electric found that 84% of business leaders and professionals in Hong Kong believe that setting standards for environmental sustainability is important to their organizations. has become a core part of its strategy. Sustainability and climate reporting.

The survey found that they still had insufficient understanding of the specific metrics and reporting framework. Science-based target initiative, which evaluates businesses to set emission reduction targets in line with limiting targets.

Global warming, up to 1.5 °C, was fully understood by only 28% of respondents. Only 21% knew exactly who the Task Force on Climate-Related Financial Disclosures is.

According to Simon Ng, CEO of BEC, organizations have begun to recognize the value of a sustainable business strategy and commit to decarbonisation targets supporting government initiatives.

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“However, it has been demonstrated that there are still not enough resources or plans in place to implement the reduction measures. As a result, there are concerns within the organization that they will miss out on their committed targets.

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