What are green loans and social bonds and why they are the future of the economy

The threat of climate change has never seemed as close as in recent years, during which a global awareness of the issue has awakened, unprecedented in our entire history. Institutions, especially the European Union, are leading the necessary transition towards a sustainable economy, low in emissions, seeking a more social and environmentally responsible growth.

The banking sector, as a motor of the economy, is key in this process, as highlighted by Alberto Aza, spokesperson for CECA. This banking association groups some of the most important entities in our country: CaixaBank, Kutxabank and Cajasur Banco, Abanca, Unicaja Banco, Ibercaja Banco, Caixa Ontinyent, Colonya Pollença and Cecabank. “Meeting the objectives of the 2030 Agenda will require a very significant volume of investment,” he asserts.



“In the European Union, the transition will be financed through the European Green Deal Investment Plan, but also through the Next Generation EU Reconstruction Funds initiated after the pandemic, which will clearly represent a very important additional financial boost. With these two initiatives, the European Union aims to mobilize 1.2 trillion euros annually in both public and private funding. For this objective to be met, the involvement of the banking sector through sustainable finance will be crucial,” explains Alberto Aza.

By sustainable finance, the expert refers to “those that, without renouncing strictly financial criteria such as profitability, risk, and liquidity, also incorporate environmental, social, and governance criteria and, therefore, will be fundamental in making the transformation of our economy into a more sustainable model possible.”

This type of financing, such as green loans or social bonds, will allow capital flows to be redirected towards activities and sectors that are more responsible towards society and the environment. “As a motor of the economy, the banking sector will have a key role as a catalyst for change thanks to the sustainable financing granted to businesses and families,” affirms Alberto Aza. Furthermore, credits to families related to sustainable consumption will promote more responsible habits towards the environment and society.

Regarding credit for businesses, “in Spain, the bulk of business financing is really channeled through the banking sector,” explains the CECA spokesperson. “That is to say, without banking, our companies would hardly be able to tackle the challenge of transforming their production model into a more sustainable one. Moreover, in the coming years, with the execution of European funds, the involvement of the banking sector will be even more important because bank co-financing of investment projects will be necessary to multiply the impact of these European aids in the real economy.”