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Green finances gain ground | Business

To counteract the environmental crisis and achieve climate goals, not only good intentions are required. An enormous amount of resources is also necessary to finance new means of transport, the development of sustainable infrastructure, care for the environment and the transition towards a renewable energy mix. The financial sector knows that the future is there: in the commitment to projects that adopt criteria ESG (which allude to environmental, social and corporate governance factors), which are becoming the roadmap for investors to choose the destination of their capital. But this trend, which has gained strength in recent years, still requires a tightening of the screws. The greatest challenge faced by supervisors, financial institutions and companies in general is obtaining information that allows correct investment decisions to be made and that facilitates the optimal allocation of resources.

“It is necessary for financial intermediaries to identify, measure, manage and report on the risks associated with the climate and properly incorporate them into their investment decisions”, believes Margarita Delgado, deputy governor of the Bank of Spain. To achieve this, the existence of solid databases is essential. In a meeting organized by EL PAÍS, in collaboration with Bestinver, manager of Acciona, Delgado stated that various initiatives have been launched at the local and European level to obtain this information. Among them, she highlighted the publication of the proposal for a corporate information directive on sustainability: Corporate Sustainability Reporting, which expands the number of companies with an obligation to report ESG information. As well as the final draft of the implementation standard (ITS) of the European Banking Authority on disclosure of ESG risks.

The latter is a report that affects financial entities and constitutes a key element, because it outlines the information framework that they must report on ESG risks and that, basically, refers to the companies that make up their credit portfolio. The report includes quantitative information on climate risks (physical and transitional) and, on the other hand, indicators on measures to mitigate climate change. “These indicators will be key to be able to make comparisons between entities,” Delgado stressed. The representative of the Spanish supervisor said that on this path towards a sustainable economy, the taxonomy and classification of the sectors will have to be progressive and orderly. “The taxonomy should not be binary, in the sense of classifying sectors as green or brown, but should take into account all the nuances and peculiarities of each productive sector. This is necessary to be able to adequately finance the transformation of those sectors that pollute the most”, she added.

a solid trend

Investors have shown their growing interest in those products that incorporate sustainability factors, such as green bonds, social bonds, sustainability bonds and bonds with objectives linked to sustainability. “The volume of financing mobilized through these instruments has only grown in recent years and everything indicates that the trend will continue in the coming years,” said Delgado. However, there are still many issues that remain to be cleared up in this area. “Investments must be made based on knowledge,” warned Enrique Pérez-Pla, CEO of Bestinver, at the meeting entitled Sustainable Finance. “In recent years, we are seeing a surge in sustainable investing that has already set a trend and has gone from being a fad to becoming a reality,” he added. However, according to the latest Savings and Investment Observatory in Spain (carried out by Bestinver), seven out of 10 investors are still unaware of ESG criteria. “We still have a long way to go,” Pérez-Pla added.

One of the great challenges that the financial sector has to overcome is related to the lack of specialists in sustainability issues. “Until now, it did not have many professionals who were experts in environmental issues,” commented Ana Martínez-Pina, former vice president of the National Securities Market Commission (CNMV) and head of Regulatory-Financial Affairs at Gómez Acebo & Pombo. “You need experts who really enable companies to apply the regulations correctly,” she explained. Above all, a greater number of specialists will help counteract the so-called greenwashing (ecological bleaching), which sells an image of sustainability that is not real. The information and the study of each project and case in particular will make the difference between the plans that seek a true environmental and social change. “The challenge is to dedicate time to the analysis to distinguish the companies that are doing an exercise, perhaps, more of public relations than of change”, assured Jaime Ramos, manager of Bestinver Megatrends.

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In Spain, between 80% and 90% of the investment product offer integrates ESG factors (Environmental, Social and Good Governance Criteria), explained Claudia Antuña, partner of International Financial Analysts (Afi) and specialist in sustainable investments. “In other words, they recognize that the integration of ESG factors is a valid tool for better management.”

But, according to the expert, at the moment within the total investment funds there are very few that are considered sustainable investment, with a regulatory classification. “At the end of March there were 179 products called article 8 [incluyen criterios de sostenibilidad en el proceso de inversión, según el Reglamento de Divulgación de Finanzas Sostenibles] and eight products that are article 9 [que incluye criterios más estrictos]”, according to the specialist. In total, it is 12% of the products that exist in Spain, said Antuña.

For Andrea González, deputy director general of Spainsif, the great challenge ahead in this field is that of a just transition. “We run the risk that with all the climate urgency we will suddenly take capital massively from industries that are essential for the productive fabric and that the labor markets will suffer.” To avoid this, González stressed, it is important to measure the time to redraw and redesign those sectors that are being disrupted with the transition to more sustainable models.

The Sustainable Finance meeting is the first of several events carried out by EL PAÍS in the hands of Bestinver, manager of Acciona, and which is included in the Global Cities Cycle.

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