- Video
- Market & Regulatory Insights
- Spotlight Asia Pacific
- Outlook
- Industry/sector insights
Integrating ESG into business strategy
Around the world businesses are looking for ways to align their ESG goals with their business strategies in view of navigating challenges and generating sustainable growth. Financial institutions have a key role to play in this by providing access to sustainable financing and potentially helping businesses with ESG tracking and risk management solutions. By increasing transparency, better measuring sustainability progress and streamlining reporting, organisations can stay ahead in a market of rapidly changing stakeholder expectations.
At our recent Financial Institutions Conference, we brought together speakers to discuss why this has become a priority for businesses and how they can make progress in this area:
Building the concept of shared value
Organisations now have an opportunity to shift their growth strategy to consider stakeholder impacts, whether it’s their customers, employees or communities.
- The rise of shared value reflects a growing focus beyond products and services, with more businesses prioritising employee onboarding, capital utilisation and research as key areas where ESG and business strategy can align.
- Organisations are developing more cross-functional partnerships to address issues such as ESG materiality and ensure measurement of strategic activities and areas.
Enhancing ESG reporting
The imperative for institutions to establish clear and efficient ESG disclosure and reporting guidelines is rising amidst regulatory changes and demand from stakeholders.
- Increasing ESG risks have accelerated the need for more standardisation in the reporting and public sharing of data across the financial institution landscape.
- New taxonomies and frameworks for sustainability reporting are coming online and will be critical as financial institutions look to lead in this area.
For financial institutions that are new to ESG, they may be more focused on starting with compliance, looking at their product suite, how they report against those and lining them up with sustainable finance standards.
|
Driving growth in green financing
Sustainable finance is an increasingly attractive tool for businesses to drive growth through their environmental commitments, with financial institutions looking for new ways to increase access:
- As of November 2021, ESG was playing a fundamental role in around 20% of the bond market in Asia, up 66% from 2020, reflecting increasing opportunities in this critical area of the capital market.1
- Capital providers are increasing their support for net-zero by 2050 targets with a combined USD130tn in their capital base, signalling greater access to funding for sustainability commitments.2
- Sustainability-linked instruments continue to be used extensively to incentivise better ESG performance from corporates, a trend that is further developing as the demand for sustainable financing increases.
ESG has moved from being a niche part of the market to a fundamental part of the market. Investor knowledge and understanding has dramatically accelerated and now it’s a core component of our credit conversations.
|
Incorporating ESG into trade
Sustainable supply chains is a major trend with significant opportunities for businesses in terms of supplier relations, mitigating risks and maximising value to end consumers who are putting a premium on ESG performance.
- Trade finance is central to the 2050 net-zero transition, with some USD25tn to USD50tn being required to help companies reduce scope three emissions along their supply chains.3
- Financial institutions are working hard to overcome existing challenges around assessing sustainability in supply chains, selecting appropriate certifications and understanding the needs of SME businesses and their suppliers.
- A reliable banking partner such as HSBC can help with solutions designed to support businesses build more sustainable supply chains and achieve resilience in a quickly evolving global trade environment.
To embed ESG into credit, and then more importantly into capital models, that will be the game changer because then we can genuinely incentivise better pricing through lower capital against ESG assets.
|
Discover more
Opportunities across East and West corridors
Amidst a rapidly evolving trade landscape globally, businesses are looking for new opportunities to invest and expand across East and West corridors. Efforts are underway to make the business environment more stable and reliable, while multinationals are increasingly pursuing joint venture and M&As in key markets such as China - especially as the country continues to open up its financial markets.
