KUALA LUMPUR: HSBC in Malaysia launched its first environmental, social and governance (ESG) Islamic structured product in the country.

The landmark ringgit principal protected participation floating rate Islamic negotiable instruments  linked to Hang Seng Corporate sustainability index is an ESG-related Islamic structured product which is 100% principal protected if held to maturity. 

The product offered by HSBC Amanah provides customers the opportunity to invest in a product that matches their values when it comes to environmental and social causes, it said in a statement on  Tuesday.

The bank said this was in line with Bank Negara Malaysia’s value-based intermediation (VBI) initiative.

It pays fixed coupon of 3.90% per annum (three years tenor) and 4.50% per annum (four years tenor) in the first two years of the investment. Payout at the end of third and fourth year is subject to Hang Seng Corporate Sustainability Index performance and subject to cap of 5.90% and US$-Ringgit adjustment. 

Hang Seng Corporate Sustainability Index tracks the performances of Hong Kong listed companies that excel in corporate sustainability. 

HSBC said ESG investing is the concept of incorporating Environmental, Social and Governance factors alongside traditional financial factors in investment process. ESG investing generally aims to generate long-term financial returns whilst contributing positively to society. 

Some of the common topics examined under ESG investing process are climate change impact, energy efficiency, human rights, consumer privacy, gender equality, health and safety, corporate governance, business ethics and more. 

Essentially, the ESG-related Islamic Structured Product offered by HSBC Amanah provides customers the opportunity to invest in a product that matches their values when it comes to environmental and social causes. 

The ESG Islamic Structured Product is open for subscription to HSBC / HSBC Amanah Premier customers from June 10 to June 21, 2019. 

“Investment strategies incorporating ESG have seen rapid global growth in recent years. The main factors driving ESG asset growth, among others, include the demand from asset owners and risk mitigation whereby ESG factors can be financially material,” said Tara Latini, country head, retail banking and wealth management, HSBC Bank Malaysia.

“The launch of the ESG Islamic Structured Product is indeed in line with HSBC Group’s aspiration in sustainable investment and reflects the Group’s overarching commitment to global sustainable development. We at HSBC believe that ESG factors can be used to drive portfolio outperformance and investors should consider these factors when making investment decisions.