Companies have to develop sustainable finance in response to environmental challenge
If the transition to sustainable finance is to be possible, society needs a committed business community that is aware of the environmental challenges, knows how to take advantage of the opportunities provided by green financial solutions and participates actively in the debate. This was one of the main conclusions to emerge from the recent breakfast meeting "Sustainable Finance: solutions for a green economy", organized by Grupo Español para el Crecimiento Verde (the Spanish Green Growth Group) and BBVA, which took place in the Bank's headquarters.
The Spanish Green Growth Group is an association of companies that aims to promote public-private partnership and make joint progress in tackling environmental challenges. The solutions for mitigating and adapting to climate change, decarbonization and promotion of a circular economy, are keys to a prosperous society and they will be implemented with the support of businesses. The Spanish Green Growth Group platform encourages companies to participate in key debates at domestic and international level, share information and identify opportunities for Spanish companies. BBVA is an active member of this association.
The meeting held at the Bank highlighted the two key elements for making progress in the area of green finance in Europe. First is enhancing the contribution of finance to sustainable and inclusive growth through financing society's long-term needs. The second element is the strengthening of financial stability through the incorporation of environmental, social and governance (ESG) criteria in investment decisions.
Speakers also emphasized the number diversity of organizations and institutions that are increasing their efforts to achieve a single reform agenda. Governments, authorities, international bodies and the private sector continue to work to promote its growth. One example of this is the commitment to green bonds. The industrial issuers most active in green bonds have undertaken to double the volume of their issuance and encourage other companies to issue them.
BBVA's José Manuel González-Páramo during his presentation
Among the important issues on the breakfast agenda was the priority of establishing a common taxonomy of sustainable finance to reinforce the consistency and clarity of the market, starting with climate change.
Clarifying the fiduciary duties of investors to extend time horizons and put greater emphasis on ESG factors are other issues to be dealt with that are considered essential to make progress in this area. A further necessary condition is updating reporting rules so that the risks and opportunities of climate change are transparent. The aim of all these measures is to obtain a framework of sustainable finance that covers financial products, assets, institutions and authorities.
In his presentation José Manuel González-Páramo from BBVA called for an in-depth reflection on the need to change economic growth models and ensure that they include sustainability criteria in the broadest sense. "Transformation of the industry is essential if there is to be a transition to a sustainable economy," he explained, "and the financial sector's contribution is a key part of the framework."
He also presented BBVA's 2025 Commitment, the Bank's strategy for climate change and sustainable development, which is based on the three pillars of finance, management and commitment. Under this eight-year commitment (2018-2025), BBVA has undertaken to mobilize €100 billion in green and social finance, sustainable infrastructures and agribusiness, as well as social entrepreneurship and financial inclusion.
BBVA has the capability, knowledge and experience to provide its customers with top-quality advice on sustainable funding solutions in both bonds and loans, and is playing a key role in developing both markets. The bank was the most active placement agent in the green bond market in Spain and Portugal in 2017, and has become a global model after advising, placing and structuring green bonds for clients from a variety of sectors in Mexico, the U.S. and Europe, in local currency as well as in euros and dollars. BBVA was a pioneer in the green loans business, and is now a driving force, closing the year as the most active entity worldwide, with a total of 11 transactions in Europe and Latin America for clients from a variety sectors, and as the undisputed leader in Spain.