Sustainability is becoming more quickly imbedded in Singapore’s capital markets, and the Republic’s investors and issuers are the world’s most enthusiastic about sustainable infrastructure investment. The findings come from a recent HSBC Survey: HSBC Sustainable Financing and Investing Survey 2020.
The survey sought the views of 50 investors and 50 issuers in Singapore, as part of a global report which recorded the views of over 2,000 market participants globally.
Singapore: a center for sustainable capital markets
The survey points to several significant trends in Singapore, including:
- Singapore’s issuers and investors see strong potential in sustainable infrastructure investment, recording scores above both the regional and global averages alongside Hong Kong.
- Singapore issuers are more positive than their global peers about both smart city and water and waste water infrastructure investment, as well as being above average in their assessment of the potential in other sustainable areas.
- Singapore issuers are leading the way when it comes to disclosure of environmental and social impacts; nearly a quarter of Singapore issuers happily expect to increase disclosures, ahead of their regional counterparts.
- Whilst Singaporean issuers have temporarily reduced their emphasis on sustainability during the pandemic, the pandemic has resulted in an increased focus on wellbeing; 53% among Asian issuers regard social wellbeing as more important than before the pandemic, with Singapore (66%) especially strong on the point.
Priya Kini, Head of Global Banking, HSBC Singapore: “It’s unsurprising that Singapore paused their focus on sustainability during the pandemic. What’s crucial though is that issuers are looking to the future; recognising the need to be open and transparent. With enhanced disclosures, the obvious benefit is that Singapore is likely to see increased international investment in its sustainable finance market.”
Southeast Asia Infrastructure Imperative
The Survey comes amidst increasing evidence of the need to address climate change in Southeast Asia. HSBC Global Research recently reported that of the 20 global cities most vulnerable to rising sea levels, 15 are in Asia including 5 in ASEAN.1 Another World Bank study estimates that a 1 meter rise in sea levels would affect 37 million people in East Asia and Southeast Asia. If the level rises by 5 meters, the population figure increases to over 160 million.2.
The Survey also revealed that more issuers in Asia than any other region expect to reallocate capital in response to environmental and social issues in the next five years — 43% expect to make substantial change, against a global average of 32%.
Issuers and investors in the region are starting to engage with green bonds and loans as a vehicle for sustainable financing. This reflects China’s standing as one of the world’s largest green bond markets and accelerating activity in other Asian countries such as India and Singapore. Asian issuers’ high satisfaction with the instruments is notable. More than 90% were very or moderately satisfied with the experience of funding through these types of bonds and loans — the most favourable response of any region.
Ms. Kini continued: “Singapore is at the heart of a region which is poised to face the full force of climate change. The money needed to flow into almost every economic sector to create substantial change is vast; and Singapore’s capital markets are alive to this. These positive responses — in the face of a global pandemic with unprecedented and still unfolding impact — underscore how central sustainability is becoming to financing and investing.”
About the report
The report surveyed 325 issuers and 325 investors across Australia, mainland China, Hong Kong SAR, India, Indonesia, Japan, Malaysia, Singapore and Thailand, on their changing attitudes to sustainability issues. Asia is the biggest regional respondent base in the global report that covered 1,000 issuers and 1,000 investors.
The full report is available at: http://gbm.hsbc.com/solutions/sustainable-financing
1 HSBC Global Research: Tackling the next crisis, 23 September 2020
2 World Bank Blogs: Risk of sea-level rise: high stakes for East Asia & Pacific region countries, 9 March 2018