Opportunity or Risk?

The vibe of participants towards the emergence of sustainability as an issue is generally positive.

Many see it as both inevitable and necessary. When asked whether this focus on sustainability felt more like an opportunity or a risk, the weight was more towards opportunity.

“Firstly, if you're going to do it, you have to do it genuinely. If you don't do it, you get left behind. I think just paying lip service to it and doing it just for the sake of doing it is probably not an optimal strategy. It is where our world is moving to, and it is an opportunity.”

- Global Bank

“Just because you’re focused on risk management doesn’t mean you’re not thinking positively about opportunities, I’m certainly a glass half full, initially it’s just prudent to be doing this on a risk management basis.”

- Global Investor

Participants are alert to the emergence of sustainability as an issue that is here to stay, but also realistic about how long it will take before critical mass in the market occurs. “In our asset class, in the short term, it is probably just mitigating risk. Long term, I think there are opportunities, but asset originators have a lot of work to do in this country to come up to speed, to create those opportunities.”

- Local Investor

A lack of long-term analysis of the impact of sustainable practices on both investment returns and environmental or social outcomes has many being cautious about what to expect in the future. There is a confidence amongst participants in relation to their governance and many have been working towards ensuring their social footprint is sound, but the impact companies can have on both the environment and collective social issues is really an unknown.

“We feel like we were founded on this, what amounts to a social loan. We feel like, you know, 70 years with dealing with institutional mandates, we've got the “G” in spades. The “S”, I think, comes along with our commitment to social loans, but always the battle for us was the “E” - how do we, as a humble small-scale mortgage lender, how do we really make an impact on 'green' issues?”

- Non Bank Issuer Some are in no doubt that this focus on sustainability will bring benefits both to their own business and to society as a whole.

“Look, it's absolutely an opportunity, it's a huge opportunity for companies who want to lead and lean in. ESG is for the good and is going to make the world a much better place moving forward.”

- Service Provider

There is heightened awareness and discourse that participants may be left behind.

“The developments that we've seen - the UK leading on 'green' bonds has been particularly valuable, because what it’s shown to the market is, actually, there is a way - for us, I think it's an opportunity. There is a big thematic to capture and we are really well positioned to capture it. We want to make sure we're not left behind at the station, clutching our suitcases, wishing we were on the train.”

- Non Bank Issuer