HSBC high­lights $600mn green bond of QNB, says sus­tain­able fi­nance gains mo­men­tum in Mid­dle East

Gulf Times - Gulf Times Business - - FRONT PAGE -

Sus­tain­able fi­nance is gain­ing mo­men­tum in the Mid­dle East; HSBC said and noted Qatar’s QNB rais­ing $600mn via its “de­but green bond”, the largest green is­suance by a fi­nan­cial in­sti­tu­tion in the Mid­dle East.

Is­su­ing find­ings of its re­cent global sur­vey, HSBC said it showed how sus­tain­able fi­nance is gain­ing mo­men­tum in the Mid­dle East, with ‘val­ues’ the main driver among of is­suers of bonds, loans and other se­cu­ri­ties in the re­gion.

The ‘HSBC 2020 Sus­tain­able Fi­nance and In­vest­ing Sur­vey’ also high­lights how the Mid­dle East sus­tain­able fi­nance mar­ket is at an ear­lier stage of de­vel­op­ment than mar­kets such as Europe, Asia and North Amer­ica, with some con­trast­ing re­sults be­tween in­vestors and is­suers.

Among is­suers in the Mid­dle East, 93% say en­vi­ron­men­tal and so­cial (E&S) is­sues are im­por­tant to them – but only 65% of in­vestors feel that way (com­pared to the over­all global av­er­age of over 90%). Within these ma­jori­ties, the shares saying E&S is­sues are ‘very im­por­tant’ are also lower than in other re­gions. Fur­ther­more, just 7% of in­vestors say they al­ways take en­vi­ron­men­tal, so­cial and gov­er­nance (ESG) fac­tors into con­sid­er­a­tion in their in­vest­ments and few sup­port en­vi­ron­men­tally or so­cially de­sir­able projects at the risk of low­er­ing their re­turns.

How­ever, it should be noted that a large share of in­vestors in the Mid­dle East (41%, more than any­where else) are in­tend­ing to de­velop firm-wide poli­cies on re­spon­si­ble in­vest­ing or on ESG is­sues.

And among in­vestors who al­ready have these poli­cies in place, very high num­bers seek out ma­te­rial ESG is­sues when they in­vest and in­cor­po­rate im­pact goals. Mid­dle Eastern in­vestors are also very op­ti­mistic about the ben­e­fits of ESG - more in this re­gion than else­where see po­ten­tial for ESG strate­gies to out­per­form.

Gareth Thomas, HSBC’s re­gional head (Global Bank­ing for the Mid­dle East, North Africa and TurkeyMENA­T) said, “The re­sults of the HSBC Sus­tain­able Fi­nance and In­vest­ing Sur­vey re­flect what we are see­ing on the ground, with Mid­dle

East green and sus­tain­able bond is­suance so far this year up nearly 50% on to­tal is­suance in 2019. And 2019 saw nearly 60% growth on 2018. The green agenda is here to stay so it is im­per­a­tive that in­vestors and is­suers in the Mid­dle East en­gage on the topic to bet­ter un­der­stand how they can cap­ture the eco­nomic as well as en­vi­ron­men­tal and so­cial ben­e­fits of more sus­tain­able busi­ness mod­els.”

The last few months has seen the re­gion’s sus­tain­able fi­nance mar­ket deepen and be­come in­creas­ingly di­ver­si­fied. In Septem­ber, QNB raised $600mn via its de­but green bond, the largest green is­suance by a fi­nan­cial in­sti­tu­tion in the Mid­dle East.

“Moral val­ues are clearly in­flu­en­tial in the re­gion,” the sur­vey showed.

When asked why they care about E&S is­sues, 62% of is­suers and 47% of in­vestors say ‘we be­lieve it’s right’ – in each case, the strong­est level glob­ally.

The sur­vey re­sults also sug­gest that the global Covid-19 pan­demic has ac­cel­er­ated engagement with ESG is­sues in the Mid­dle East.

Above av­er­age pro­por­tions of is­suers (44% versus the 41% global av­er­age) and in­vestors (30% versus 29%) now be­lieve more strongly than be­fore in the im­por­tance of be­com­ing sus­tain­able or con­sid­er­ing ESG is­sues in in­vest­ing.

Gareth Thomas, HSBC’s re­gional head, Global Bank­ing for the Mid­dle East, North Africa and Turkey - MENAT.

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