Even in the absence of a strong political lead in the US, issuers and investors in the Americas stand out globally in our survey as the most committed to sustainable finance. Across a host of measures, investors especially, but also issuers, have advanced engagement with and very strong commitment to incorporating environmental and social factors into their investment and financing strategies.
Most notably, nearly two thirds of the region’s investors regard environmental and social issues as very important. This compares with a global average of 48%. Issuers in the Americas report this stance to a strongly above average extent too (71% versus 62%), with US companies especially committed (80%).
Both external and internal considerations are at work in the region’s high level of engagement. Clients or customers, employees, regulators, NGOs and broader society are all powerful drivers of Americas respondents’ positive environmental and social stances. Issuers and investors in the region feel the influence of these stakeholders more than the global averages.
This also manifests itself in exceptionally broad adoption of firm-wide policies on responsible investing or ESG issues and above average scrutiny of ESG credentials. But more classical investment considerations of risk and return are also pushing ESG forward. In contrast to other regions’ scepticism, nearly two thirds of investors in the Americas believe caring about environmental and social issues will boost their performance. An above average proportion view ESG, responsible or sustainable investing as an attractive route to investment outperformance.
This also manifests itself in exceptionally broad adoption of firm-wide policies on responsible investing or ESG issues and above average scrutiny of ESG credentials. But more classical investment considerations of risk and return are also pushing ESG forward.
In contrast to other regions’ scepticism, nearly two thirds of investors in the Americas believe caring about environmental and social issues will boost their performance. An above average proportion view ESG, responsible or sustainable investing as an attractive route to investment outperformance.
Similarly, investors make a strong top-down link between their values and the wider economy. Many more of the region’s investors (36% versus a global average of 28%, and 39% in the US) believe achieving prosperity and a healthy, secure life for all, as embodied in the UN Sustainable Development Goals, is vital for a successful, stable economy.
Values are evident elsewhere in the region’s responses, too. Both issuers and investors, for example, hold very strong views on addressing climate change. Unmatched proportions of both – 47% of issuers, 37% of investors – regard it as the single most urgent threat to humanity. Despite their commitment, both issuers and investors want more advice on ESG matters.
Three quarters of issuers in the Americas are seeking advice in general — more than in any other region — and more are seeking a lot of advice. They are particularly looking to professional advisers and government for this. Demand for advice is especially strong in Canada. US issuers are also above average. Similarly, more than half of investors are seeking advice and information on aspects of ESG investing — particularly fundamental environmental risks and measuring impact. Again, this proportion exceeds peers in any other region.
Investors support issuers Bond investors particularly notice issuers’ sustainability drives
Perhaps as a result of their significant disclosures, Americas issuers are also more confident than peers elsewhere that investors support their sustainability efforts. Although other regions report greater levels of understanding of these efforts, nowhere matches the Americas’ score for excitement over them (17%, compared to the 11% global average, and as high as 22% in the US).
Issuers in the region are also the most likely to feel their bond investors care about their environmental performance (73% report bond investors taking a substantial interest, against 67% globally). More issuers than the global average believe bondholders care about their impacts on society, too. However, they report slightly below average scores for their banks and shareholders on both questions.
Coronavirus changes attitudes Pandemic deepens issuers’ and investors’ emphasis on ESG
The COVID-19 pandemic has strongly influenced thinking about many aspects of sustainability in the Americas, which have been significantly and widely impacted by the disease. On a wide range of parameters, issuers and investors say their stances have shifted more than peers elsewhere do.
For example, nearly half of Americas investors (42%) now regard resilient supply chains as of greater importance than before the pandemic, against a global average of 32%. A similar proportion think preserving biodiversity is more important than before. Indeed, on all 10 pandemic-related matters considered in the survey — everything from working from home to sensitivity to society’s needs — Americas investors are attaching greater importance than before the pandemic, even more than the world average.
Americas issuers have also been deeply affected. On all issues but one — employees’ social wellbeing — they are above global averages, and on eight out of 10 issues they are ahead of all other regions. Besides supply chain resilience, these include considering stakeholders and scenario planning.
Green and sustainable debt More than half of issuers consider labelled borrowing
Green bonds, sustainability-linked loans and other forms of socially responsible debt are gaining traction in the Americas. Both investors and issuers’ expectations suggest notable upticks in activity.
The region boasts more issuers than elsewhere who have yet to fund themselves through green or socially responsible bonds but may do so in the future (48% versus 33% global average). Potential users of green and sustainability-linked loans are well above average too (43% versus 32% globally). Canadian issuers are especially keen on exploring both of these products.
The positive news continues, with a higher proportion of investors than anywhere else planning to start buying green and socially responsible bonds for the first time. And more existing buyers than elsewhere plan to increase their allocations to these types of bond.
“Nearly half of Americas investors think preserving biodiversity is more important than before the pandemic”
Environmental and social disclosure Sustainability strategies now integral to annual reports
Issuers in the Americas are above average for disclosing most kinds of sustainability information. Their annual reports are the primary vehicle for these disclosures, though separate corporate social responsibility (CSR) reports play significant roles too.
Nearly all issuers in all regions now report a sustainability strategy, but those in the Americas are more likely than most to publish a strategy on climate change — 94% do this, against a 91% average.
They are also ahead of the pack in reporting as recommended by the Task Force on Climate-Related Financial Disclosures (TCFD), with 60% doing it — the world average is 54%. On publishing carbon footprints, Americas issuers are above average, at 62%, but that is some way behind Europe, where 71% do. Americas issuers are top in the world for reporting other environmental metrics, at 95%.
But they are further behind in declaring their alignment with the Paris Agreement: 63% do, below the average of 71%.