Two thirds of institutional investors want to put more capital into low carbon and climate-related investments, but a lack of information on firms’ climate credentials is hampering their ability to do so, according to a survey commissioned by HSBC.

Global survey

The global survey of nearly 300 institutional investors, and almost 300 corporates, found less than a quarter of companies disclose their environmental impact, making it hard for analysts and investors to assess and compare how green they are. Even fewer companies – 13 per cent – have green or sustainable financing strategies in place.

Consequently, three quarters of investors who plan to make low carbon or climate-related investments see barriers in the form of a lack of credible investment opportunities, and a lack of access to quality research.

Momentum for change

However there is momentum for this to change. A quarter of companies that do not currently disclose their environmental impact plan to do so in the coming year; half see their disclosure around climate risk increasing; and of the half of firms that say they have strategies in place to actively reduce their environmental impact, 34% plan to disclose it in the next 12 months.

More pressure from investors, new regulation, and incentives such as tax breaks for green financing are seen by those surveyed as factors most likely to encourage greater environmental disclosure and the introduction of green financing strategies.

We cannot afford for it to fail

Andre Brandao, Head of HSBC’s Climate Business Council, said: “Moving to a low-carbon economy depends on a strong ecosystem for green financing and investment. This survey suggests there is a significant pool of capital available to firms with strong green credentials, but an absence of climate disclosure by companies, and a shortage of investors accessing research into this market, is putting a brake on allocation.” 

Brandao continued, “The banking industry needs to make a strong, joint effort with policymakers and regulators to bring these barriers down. This means a framework for standardised climate disclosure; more production and consumption of climate research; and a debate on green incentives for companies and investors. Good progress has been made, and the direction of change is encouraging, but more must be done to unlock this market. We cannot afford for it to fail.”