Businesses are increasingly seeing green strategies as fundamental to their success and long-term survival, particularly in the wake of the COVID-19 pandemic.
With increasing pressure from competitors, governments and customers, nearly a quarter of companies now believe that going green is essential to their long-term survival, according to HSBC’s recent Navigator - Resilience report.
In the report, titled Resilience: Building Back Better, 91 percent of 2,600 companies surveyed globally said that they aim to make their businesses more sustainable, while 27 percent plan to make their supply chains more environmentally friendly over the next two years.
HSBC is championing the transition to a thriving low-carbon economy through its financing and investment strategies.
“Sustainability is more important than ever before. COVID-19 is not only redefining, but it is also accelerating the way in which we now do business,” says Daniel Howlett, Regional Head of Commercial Banking, MENAT.
“Our objective is to be in a position to help lead in this area, where we are deliberately prioritising financing and investment that supports those companies that are transitioning to a net zero global economy,” he says.
Working with its corporate clients to reduce global emissions, HSBC aims to achieve net zero carbon emissions from its overall portfolio by 2050 or sooner. Within its own operations and supply chain, the bank’s net zero target is 2030.
With COVID-19 reshaping the corporate landscape, many firms are now prioritising sustainability because it improves efficiency, provides a competitive advantage and drives sales.
“A lot of our clients are looking at this opportunity to retool and find a new way of dealing with sustainability,” says Malek Sukkar, CEO of Averda, a global waste management services provider. “They are coming to us and saying, how can we look at a post-COVID world in a more sustainable, more eco-friendly and more environmentally encompassing way?” Highlighting the concern for a more sustainable future as companies look to rebuild.
HSBC’s ambition is to support customers with between U.S.$750 billion and U.S.$1 trillion of finance and investment by 2030 to help with their low carbon transition.
“It is a realistic objective that where companies are committed to more sustainable projects going forward, we are able to provide them with differential pricing tied to those green objectives,” Howlett says.
The bank wants to continue working with all its customers to help them transition to lower carbon emissions.
The economies of the Middle East have long been tied to the oil and gas industries.
With the increasing threat of climate change, governments across the region have been seeking ways to diversify from hydrocarbons, embracing a greener future.
“There is an inherent pivot point in the way in which the region approaches sustainability. We are seeing more and more businesses seeking to shift their focus, or target their growth aspirations to sustainability,” says Howlett.
In 2017, the UAE launched its Energy Strategy 2050 policy, which aims to increase the contribution of clean energy in the total energy mix by 2050 to 50 percent from 25 percent and cut by 70 percent the carbon footprint of power generation1.
Neighbouring Saudi Arabia is looking to invest U.S.$50 billion in renewable energy projects such as solar and wind by 2023 to reduce its dependence on oil2. In September, Egypt issued the region’s first sovereign green bond, worth U.S.$750 million, which was nearly five times oversubscribed3.
“The desert is a magnificent competitor to sustainability. It is currently very cheap to just dump something in the desert,” says Sukkar, whose company operates across eight countries, collecting 10,000 tonnes of waste daily.
“While five, 10 years ago that was sort of acceptable to people, today that is completely unacceptable. There is a lot more desire for sustainable practices from the younger generation,” he says.
Technology is also a driving factor in the race to a greener economy. “There are a lot of newer technologies that require less energy, that require less space and there’s the opportunity to work with these, whether on recycling plastics or other materials,” says Sukkar.
Recycling technology is nascent and developing rapidly, which leaves waste processing companies often facing difficult investment decisions, especially in case of large projects.
Averda has invested in digitally transforming its business, putting a lot of capability into its waste collection system to ensure it can trace back where it was collected from, monitoring digitally its truck fleet.
In the world transformed by COVID-19, sustainability is increasingly seen as key to business success with most high-growth companies actively making changes to become more green. Sukkar noted, “I think in a time of crisis you relook at everything and I think as businesses look they're beginning to see that there is an opportunity”.
HSBC will continue to be at the forefront of the sustainability drive, enhancing through finance the positive impact on communities and economies.
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