Projects with an environmental, social and good governance vision are the projects that will attract the most investment
Investment in sustainable finance has an increasingly specific regulatory framework. The European Commission has been making progress in this area since it launched an action plan in 2018 to redirect capital flows towards improving society and the planet, to manage financial risks arising from the climate emergency and social problems, and to promote maximum transparency and long-term accountability in financial and economic activities.
To continue promoting sustainable investment, less than a month ago the European Commission presented a new package of measures, which it expects will be implemented from January 2024. It includes new standards for environmental, social and good governance (ESG) rating providers, so that companies seeking to invest in their transition to sustainability can do so with greater certainty.
Responsible investment has an increasingly specific regulatory framework
Despite the increase in ESG investment, which currently stands at 25%, the steps being taken are still insufficient to meet the Sustainable Development Goals (SDGs) set by the United Nations. In this context, experts believe it is essential that, in addition to having an appropriate regulatory framework, there should be more consultancy on sustainable finance in order to raise awareness of its advantages among the business and investor community, as they insisted at the Encuentros en la Vanguardia conference, which was held in collaboration with Acciona under the title "Sustainable finance: the great opportunity".
The round table, which was held on Tuesday 27 June at Espacio 23 in Madrid, and was accessible both in person and via streaming on this newspaper's website, featured contributions from Javier Molero, Director of Projects and Agenda 2030 at the United Nations Global Compact; Antonio Romero, member of the Finresp Executive Committee; Andrea González, CEO of Spainsif; and Federico García Guillén, Director of Development and Strategic Projects at Bestinver.
"The global commitment to sustainability implies a shift in investments and a relocation towards projects aligned with the goals we have set ourselves, including a carbon-neutral model by 2050", García Guillén stressed. Acciona, the group that includes this investment management firm, wants to "lead this change" with its commitment to sustainable finance, including renewable energies, emphasised García Guillén, whose firm manages assets of more than €5,000 million.
Experts are calling for specialised advice on these products
The Director of Projects and Agenda 2030 at the United Nations Global Compact, Javier Molero, warned that "we are at a critical moment" that requires the promotion of initiatives that enable the Sustainable Development Goals (SDGs) to be met.
In many of its policy areas, including the fight against poverty or the climate emergency, not only is there no progress, but rather a regression. "Hunger is on the rise, as are greenhouse gas emissions", Molero lamented. With less than eight years until 2030, the Director of Projects and Agenda 2030 at the United Nations Global Compact recalled that, "the growth of sustainable finance can accelerate the necessary transformation".
Andrea González, CEO of the non-profit association Spainsif, which brings together more than one hundred stakeholders in the sector - including financial institutions and insurance companies, service providers, universities and trade unions - also points to the "evolution" she sees in sustainable finance towards greater "democratisation", in that there is an increasing number of sustainable financial products that are adapted to each investor on the basis of a "suitability test" after analysing their risk and return preferences.
In areas such as the fight against poverty or the climate crisis, we are going backwards
According to Andrea González, the European regulator is a "pioneer" in that it considers not only investment in projects that are already sustainable but also the financing of the transition of many companies towards a new model.
Helping the productive fabric is fundamental for Antonio Romero, member of the Spanish Centre for Responsible and Sustainable Finance (Finresp). Finresp's goal is to encourage the sustainability strategies of small and medium-sized enterprises by providing useful solutions to facilitate their transition. A pilot project is currently underway with Cepyme to provide SMEs in six specific sectors with an assessment of their environmental, social and corporate governance parameters to help them understand their positioning in relation to other comparable companies.
Antonio Romero believes that the European action plan launched in 2018 was a "turning point", after which "the financial sector is a key instrument for channelling the necessary investments" to meet the sustainability goals. "The taxonomy is a consensus on what is sustainable and what is not, which generates trust in the regulatory framework that protects the investor", he added.
Scientific rigour and the fight against 'greenwashing' is one of the challenges facing the sector
Consultancy is the main recommendation made by experts both to investors who decide to invest in sustainable finance and to companies that seek this type of financing. Companies must "prepare themselves to organise their sustainability strategy" with a view to complying with "new directives", explained Javier Molero. The three most imminent, he stressed, are due diligence, to identify their social and environmental impacts and implement measures to mitigate them; sustainability reporting, which Javier Molero described as "very relevant", because it will force organisations to report on the same indicators in their sustainability report, which will allow for the unification of criteria; as well as that related to so-called 'greenwashing' or 'eco-whitewashing' to avoid false marketing so that their information is based on scientific verifications. "Sustainable finance is an economic opportunity, but also a social opportunity and an opportunity for the planet", he asserted.
"Sustainability must also be taken into account in the consumption of financial products", demanded Andrea González, CEO of Spainsif, who also advocates "being an activist", because currently "products are designed ad hoc for each transaction".
"We must support projects with the greatest transformative impact", González urged. We must achieve "a fair transition that will not compromise the prosperity we have attained, but rather that will enhance it in the long term", said Finresp executive committee member Antonio Romero.
"The company that is capable of leading a transformation will attract more investment flows", predicted the Director of Development and Strategic Projects at Bestinver, Federico García Guillén. However, the current difficulty that experts are facing, especially in governance-related issues, is "having information that is comparable between companies", warned García Guillén.
Despite this, the Bestinver executive noted that "giant strides are being made". "Sustainability is an inexorable challenge that requires financing and offers significant opportunities for companies and investors", was the "optimistic" message with which Bestinver's Director of Development and Strategic Projects decided to conclude his intervention in the debate.
Round table
Javier Molero, Director of Projects and Agenda 2030 of the United Nations Global Compact: "Sustainable finance is an economic opportunity, but also a social opportunity and an opportunity for the planet".
Antonio Romero, member of the Finresp Executive Committee: "A fair transition that will not compromise the prosperity we have attained, but rather that will enhance it".
Andrea González, CEO of Spainsif: "Sustainability must be taken very seriously, also in the consumption of financial products".
Federico García Guillén, Director of Development and Strategic Projects at Bestinver: "Sustainability is an inexorable challenge that requires financing and offers significant opportunities for companies and investors".
