HSBC: Investment in sustainability becoming mainstream for UK businesses
Against a backdrop of new green legislation and increasing consumer demand for low-carbon, resource-efficient products and services, almost half of UK businesses are planning to up their sustainability-related investments over the next two years.
That is a key takeaway from HSBC's 2019 ‘Made for the Future’ report, which assesses how 2,500 businesses in the UK and beyond plan to allocate their investments to prepare for future social, economic and environmental trends.
The report found that 44% of the UK-based businesses to respond to HSBC’s survey are planning to increase their environment-related investments between now and summer 2021. Of these businesses, 70% said they would use their existing profits to take this action.
The three key drivers for this green finance push were found to be operational efficiency (cited by 30% of respondents), keeping up with action from competitors (cited by 28%) and changing regulations (27%). The latter of these concerns covers both national action – notably the Government’s new net-zero ambition for 2050 – and legislation set by devolved powers and local authorities.
HSBC additionally examined how the businesses planning to boost their green investments would allocate this capital. More than two-thirds (69%) said the money would be used to make manufacturing more sustainable or to minimise indirect environmental impacts – for example, the emissions generated, or water used, through the use of their products and services. The second most common focus area was found to be improving internal practices (66%) and the third to be improving buildings and equipment (63%).
“Nearly half of companies are telling us that they plan to increase sustainability investment over the next two years, and we can see that number only rising in the future as businesses respond to the need to become more environmentally focused,” HSBC’s head of sustainable finance for the UK Rob King said, citing the UK’s net-zero target as a key driver for this trend.
“Many stakeholders are now considering a company’s green credentials when making decisions about whether to work with, work for or invest in that company.”
All systems go for green finance
The publication of HSBC’s report, which covers businesses from all major sectors, comes shortly after the bank launched a new range of green finance services aimed at helping businesses of all sizes strengthen sustainability initiatives.
Launched to coincide with the opening of London’s Green Finance Institute and the publication of the Government’s Green Finance Strategy, the HSBC offering includes a range of new loans and a Green Revolving Credit Facility (RCF) that are available for small to medium enterprises (SME) through to large corporates.
It was developed as part of HSBC’s overarching pledge to provide $100bn in sustainable financing by 2025. This ambition has also seen the company launch a $1bn green bond portfolio and partner with US-based retail giant Walmart to implement a green finance initiative that rewards suppliers for setting, meeting or exceeding ambitious sustainability aims.