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HSBC ESG Sentiment Survey – Pockets of resistance
- Anti-ESG sentiment is mostly confined to the US, our fifth ESG Sentiment Survey finds
- We also discover there’s growing pushback to some of the tighter regulations
- Respondents represent cUSD8.9 trillion in assets under management
The survey, conducted from 31 May to 24 June 2023, had a sample size of 310 from professionals working in financial services across the globe, in roles related to ESG decision making. Respondents represented 292 institutions with cUSD8.9 trillion in assets under management.
Pockets of resistance: There is undoubtedly a rise in anti-ESG sentiment in the US. We see the impact of this in areas like the approach taken to ESG, the acceptance of classification systems, and overall trust in sustainability reports. However, this was not really noticeable across other regions.
Regulation evolution: The influence of regulations has waned a little since our last survey in February and has become less of a driver of current trends. We think this is somewhat due to the confusion caused by the Sustainable Finance Disclosure Regulation earlier in the year, which required asset managers to disclose some ESG information about their investments, as well as the strong pushback against disclosures by many companies in the US.
The more you know, the less you know? Compared to a year ago, the understanding of ESG has increased, although compared to October 2022, it has declined. Regionally, however, there was a relatively large decline in Asia compared with Europe. We speculate that as awareness of ESG grows in Asia, more respondents might feel their understanding could be improved.
What about standards? We asked participants for their views on whether markets would align with the standards set out by the International Sustainability Standards Board in the coming years. Europe was a standout here with over half believing they would align; the sentiment was much lower in North America and then lower still across Asia, LatAm and MENAT.
In terms of ESG themes, it was unsurprising that decarbonisation remained the top environmental issue, although what was surprising is that it increased its share of the top choice. Resilience also garnered a higher proportion of supporters since our last survey. Interestingly, supply chains have now risen to the top of social issues, although the increase was marginal.
Topical issues – hydrogen and energy returns. We asked for views on which industries have the most promising outlook in the fledgling hydrogen sector. There was a strong view that the chemicals and transport industries could adopt hydrogen.
ESG or thematic? We believe ESG is an analytical approach and there are different approaches to incorporating ESG issues and factors. Broadly speaking, these is screening, scoring and integration. In our view, investing in specific themes (sustainable ones or otherwise) is thematic investing. Given the anti-ESG sentiment, some funds have moved away from associating with ESG but have instead called themselves thematic. This was noticeable in our findings, especially in North America, when participants were asked about their approaches to ESG.
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The following analyst(s), who is(are) primarily responsible for this document, certifies(y) that the opinion(s), views or forecasts expressed herein accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Wai-Shin Chan, CFA, Anushua Chowdhury, James Rydge, Jonathan White and Yaryna Kobel
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