The majority of issuers and investors have set their sights on reaching net zero this decade.
Within the next eight years, 61 per cent of global corporates aim to be net zero and a further 24 per cent have set a target date of 2040 according to a new survey from Westpac.
Of the 150 executives surveyed from major companies in Europe, the US and Asia Pacific, 85 per cent said they had already started to decarbonise their business or have plans to start doing so in the next year.
Westpac also investigated the views of 150 investor executives in the Asia Pacific region and found that 58 per cent had targets for net zero by 2030 and 91 per cent had started or planned to decarbonise one or more of their portfolios.
“The majority of investors and issuers in the region are taking climate matters into their own hands and are actively pursuing the decarbonisation of their businesses and portfolios,” said Westpac institutional bank CEO Anthony Miller.
46 per cent of the Asia Pacific investors indicated that a majority of their assets under management (AUM) would be allocated to sustainable assets by 2025.
The proportion of investors that allocate between 25 and 50 per cent of their AUM to sustainable investments has more than doubled from 19 per cent in 2019 to 39 per cent.
Furthermore, 23 per cent of investors said that between 50 and 75 per cent of their AUM was invested sustainably, up from only 9 per cent in 2019.
“On the issuer side, just 18 per cent of companies surveyed in 2019 had issued or utilised sustainable financing in the Asia Pacific market,” Mr Miller said.
“Today that figure has grown to well over half (56 per cent) and evolved to an increasingly broad range of debt and equity tools being issued, as companies move beyond green bonds.”
Of the corporates that utilise sustainable financing, meeting sustainability objectives (25 per cent) was cited as the main reason followed by the financial benefits (22 per cent) and diversifying their investor base (18 per cent).
“Leading into 2022, corporates have come to the sustainable finance market in record amounts as decarbonisation becomes a core strategic business focus” said Mr Miller.
“Across the board we are seeing strong commitment to mitigating climate risk and meeting ESG targets, underpinned by improved financial performance.”For investors, improved management of ESG risk (24 per cent) was identified as the main driver of sustainable finance investments, closely followed by investing for sustainability or impact outcomes (23 per cent).
77 per cent of investors said that their sustainable investments had performed better financially than the equivalent traditional investments and 83 per cent said that sustainable investments had a greater positive impact on their organisation’s reputation.
However, 25 per cent of issuers and 23 per cent of investors said that a lack of reliable data presented a major obstacle to sustainable financing and investments.
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.
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