Environmental, social and governance (ESG) considerations are having an increasing impact in the debt capital markets across Asia Pacific – on what investors buy and how borrowers look to raise funds, according to the 3rd annual green and sustainable finance poll conducted by ANZ and FinanceAsia.
Findings from around 140 issuers and investors, who were surveyed in May 2020, reinforce broad industry trends towards a greater focus on GSS instruments and mandates.
Further fuelling the appetite of investors and issuance plans of existing and potential borrowers are the sustainability conversations happening more and more in boardrooms across the region, explains Katharine Tapley, head of sustainable finance at ANZ. Both groups of respondents show a growing thirst for information, adds Andrew Brown, director, debt capital markets at ANZ. While investors seek more transparency over the GSS loans and bonds they buy, issuers want to better understand what appeals to investors.
Investors – key trends include:
- Only 19% no longer have a clearly stated ESG or sustainability strategy, down from 34% a year ago
- Over half are either directly familiar with sustainability-linked loans and bonds (SLBs) or have some knowledge of them but need to learn more
- The spotlight on GSS issues is reflected in the resources being allocated to ESG – via internal ESG scoring systems being developed, plus more investors than ever before having a specific ESG or sustainability fund
- Reporting of proceeds and impact are now ‘necessary’ for a far higher number of investors than in the 2019 poll
Issuers – key trends include:
- There is clear growth in GSS issuance compared with the 2019 poll
- ‘Time’ represents one of the key hindrances for borrowers when it comes to GSS issuance
- Borrowers are keen to become more aware of the process of issuing and of market trends
- Issuers should look to take a more collaborative approach with their intermediaries to improve their understanding of the loans and bonds available to suit their funding strategy
To read more detailed insights on how the capabilities, strategy, preferences, requirements and plans in relation to GSS issuance are evolving for investors and issuers alike – click here.