Since Covid-19 swept across the world, shutting down cities, slowing down trade and changing the way we work, businesses have had to adapt. The crisis is impacting everyone across the world irrespective of location and borders. There has been a collective effort to the end the pandemic and the response has brought to the forefront the vital importance of investing in more sustainable business models. The latest findings from HSBC’s Navigator Report show that 98 percent of companies in the Middle East see multiple opportunities from improving their environmental and ethical sustainability.
There have been several years of shifting societal expectations. Investors have been placing increased importance on the wider social and environmental impact of businesses and international supply chains – GCC bond and sustainability-linked debt issuance out of the Middle East roughly doubled to almost $5 billion in 2020.
But change needs to happen at a much faster rate and at every level of the economy if the world is to achieve the Paris Agreement target of limiting the rise in the planet’s temperature to well below 2 degrees Celsius above pre-industrial levels by 2050 – countries across the Middle East have committed to this. So, how do business leaders make their companies more sustainable and resilient?
There isn’t a single correct answer.
Sustainability cuts across all the activities of any company, such as reducing its own environmental and social footprint, working across its value chain, both clients and suppliers, to ensure the highest standards are met, or improving staff wellbeing. A company must also create a robust and transparent governance framework that enables it to thrive in an increasingly complex and demanding business ecosystem.
All of these activities fall under the ESG (Environment, Social, Governance) framework of the company. Many organisations have been advancing in silos, focusing on the most material issues in their operations but they lack a well-structured framework to align to, and to present to their stakeholders.
The mindset is shifting and moving towards bigger more meaningful change, not just on a local scale but one that could have an impact globally. Companies are questioning how they can contribute to a net zero economy and reduce carbon emissions to protect the planet and to help build a thriving, resilient future for society and businesses.
Banks have a role to play and must prioritise financing and investment that support the transition to a net-zero economy, that’s why we and 41 other banks last week founded the industry-led, UN-convened Net Zero Banking Alliance (NZBA) to bring collaborating and consistency to collective efforts to reach the Paris Agreement goals. That reinforces our pledge to reduce financed emissions from our own portfolio of customers to net-zero by 2050 or sooner and to provide between $750 billion and $1 trillion of finance and investment by 2030 to help achieve this goal.
If there is one lesson learned during the pandemic, it is that partnerships are needed more than ever. We were more interconnected than we thought and our markets were reliant on each other to keep their economies ticking. That is why collaboration is vital in order to protect our planet. Banks need to work with investors, governments, NGO’s and other financial institutions to support long-term environmentally sustainable projects.
At HSBC, we are doing this in the Middle East through programmes such as Living Business, which aims to help businesses, regardless of their size, deliver a significant and meaningful ESG enhancement to their business operations. Through the programme, participating companies last year managed to reduce more than 1,800 tonnes of CO2 emissions and diverted 500 metrics tonnes of waste from landfill towards upcycling models, among many other success stories.
Companies need to feel they are in a position to withstand any unexpected interruptions. It is only the most agile and forward-looking organisations that will survive. Adopting a sustainability lens, which by definition is holistic and long-term, will better prepare businesses to adapt, reorganise, find new growth opportunities and continue to thrive.
Sabrin Rahman, managing director, head of sustainability for Europe and the Middle East, HSBC
Written by Staff Writer
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Why companies need to increase ESG alignment to resist future shocks
Since Covid-19 swept across the world, shutting down cities, slowing down trade and changing the way we work, businesses have had to adapt. The crisis is impacting everyone across the world irrespective of location and borders. There has been a collective effort to the end the pandemic and the response has brought to the forefront the vital importance of investing in more sustainable business models. The latest findings from HSBC’s Navigator Report show that 98 percent of companies in the Middle East see multiple opportunities from improving their environmental and ethical sustainability.
There have been several years of shifting societal expectations. Investors have been placing increased importance on the wider social and environmental impact of businesses and international supply chains – GCC bond and sustainability-linked debt issuance out of the Middle East roughly doubled to almost $5 billion in 2020.
But change needs to happen at a much faster rate and at every level of the economy if the world is to achieve the Paris Agreement target of limiting the rise in the planet’s temperature to well below 2 degrees Celsius above pre-industrial levels by 2050 – countries across the Middle East have committed to this. So, how do business leaders make their companies more sustainable and resilient?
There isn’t a single correct answer.
Sustainability cuts across all the activities of any company, such as reducing its own environmental and social footprint, working across its value chain, both clients and suppliers, to ensure the highest standards are met, or improving staff wellbeing. A company must also create a robust and transparent governance framework that enables it to thrive in an increasingly complex and demanding business ecosystem.
All of these activities fall under the ESG (Environment, Social, Governance) framework of the company. Many organisations have been advancing in silos, focusing on the most material issues in their operations but they lack a well-structured framework to align to, and to present to their stakeholders.
The mindset is shifting and moving towards bigger more meaningful change, not just on a local scale but one that could have an impact globally. Companies are questioning how they can contribute to a net zero economy and reduce carbon emissions to protect the planet and to help build a thriving, resilient future for society and businesses.
Banks have a role to play and must prioritise financing and investment that support the transition to a net-zero economy, that’s why we and 41 other banks last week founded the industry-led, UN-convened Net Zero Banking Alliance (NZBA) to bring collaborating and consistency to collective efforts to reach the Paris Agreement goals. That reinforces our pledge to reduce financed emissions from our own portfolio of customers to net-zero by 2050 or sooner and to provide between $750 billion and $1 trillion of finance and investment by 2030 to help achieve this goal.
If there is one lesson learned during the pandemic, it is that partnerships are needed more than ever. We were more interconnected than we thought and our markets were reliant on each other to keep their economies ticking. That is why collaboration is vital in order to protect our planet. Banks need to work with investors, governments, NGO’s and other financial institutions to support long-term environmentally sustainable projects.
At HSBC, we are doing this in the Middle East through programmes such as Living Business, which aims to help businesses, regardless of their size, deliver a significant and meaningful ESG enhancement to their business operations. Through the programme, participating companies last year managed to reduce more than 1,800 tonnes of CO2 emissions and diverted 500 metrics tonnes of waste from landfill towards upcycling models, among many other success stories.
Companies need to feel they are in a position to withstand any unexpected interruptions. It is only the most agile and forward-looking organisations that will survive. Adopting a sustainability lens, which by definition is holistic and long-term, will better prepare businesses to adapt, reorganise, find new growth opportunities and continue to thrive.
Sabrin Rahman, managing director, head of sustainability for Europe and the Middle East, HSBC
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