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Will inflation derail ESG targets? HSBC poll finds almost 60 per cent of financial professionals believe higher costs could hinder sustainability strategies

  • Rising costs are generally thought to have a negative impact on sustainability, HSBC analysts say in report
  • Rising costs and uncertain market conditions might force business leaders to make short-term decisions, Baker McKenzie separately says

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The HSBC headquarters in Hong Kong’s Central. The bank’s third ESG sentiment survey this year polled 352 financial professionals across the globe in roles related to ESG decision-making. Photo: Yik Yeung -man
Martin Choi
Six out of 10 financial professionals involved in environmental, social and governance (ESG) decision-making believe rising costs will hinder the sustainability strategies of the businesses they invest in, according to an HSBC survey.

Rising costs are generally thought to have a negative impact on sustainability because a high-interest-rate environment could make it more costly for businesses to borrow money and lead them to spend less on issues such as sustainability, HSBC analysts led by Chan Wai-shin, head of ESG research, said in a report on the survey released on Wednesday.

HSBC’s third ESG sentiment survey this year polled 352 financial professionals across the globe in roles related to ESG decision-making. They represented US$10 trillion in assets under management across 329 institutions. The bank conducted the survey in February and June as well.

About 34 per cent of the respondents believed inflation would hinder corporate sustainability strategies in the short term, while 25 per cent said it would be a long-term hindrance. Only 14 per cent believed rising costs would be a catalyst for firms’ sustainability strategies.

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“This is understandable in terms of diverting resources to deal with material sourcing and wages, which may need to be dealt with in the short term, rather than focusing on long-term issues such as sustainability,” Chan said.

The survey, intended to gauge where clients are in terms of their ESG strategies and the momentum of development and future intentions, was conducted by London-based research company Survation between October 4 and November 3. About 15 per cent of the respondents were located in Asia, while 21 per cent had operations in the region.

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