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Sustainability 10 May 2018

Climate change: Businesses and investors spring into action

Iberdrola, Repsol and BlackRock representatives debated today about the need to integrate climate change into their strategies, speaking at the ‘BBVA Sustainable Finance Forum’ event, held today at BBVA’s headquarters in Madrid. The main takeaways were two: An actual commitment to sustainability is an opportunity, not a threat; and, more and more, investors demand companies to include sustainable criteria in their strategies.

José Manuel González-Páramo, Executive Member of the Board, Head of Global Economics, Regulation and Public Affairs at BBVA, moderated this panel, consisting of Iberdrola Chairman and CEO Ignacio Sánchez Galán; Repsol CEO Josu Jon Imaz; and Isabelle Mateos y Lago, member of BlackRock Investment Institute.

The world is undergoing a period of economic and social disruption, marked by the Fourth Industrial Revolution, which has laid bare a huge environmental problem: climate change. And the integration of environmental criteria into companies is not a minor issue. The private industry’s contribution is essential for the effective fulfillment of the international agreements reached in 2015: The UN 2030 Agenda – and its Sustainable Development Goals – and the Paris Agreement.

According to José Manuel González-Páramo, it is time for companies to integrate environmental considerations into their strategy. “Today”, he said, “the status quo is not an option. We can’t just stand still and do nothing.” In this sense, he stressed the need for a cultural overhaul within organizations; a transformation that encompasses strategy, risk management and corporate governance. He called for frameworks that “ensure that sustainability goes beyond CSR” and is part of all processes.

José Manuel González-Páramo: “The status quo is not an option. We can’t just stand still and do nothing”

BBVA is committed to these goals and has been working for some time now on including the environmental factor in decision making processes. José Manuel González-Páramo mentioned BBVA’s commitment, which has taken a significant leap forward with the adoption of its Pledge 2025 on climate change and sustainable development.

From left to righ: José Manuel González-Páramo, Executive Member of the Board, Head of Global Economics, Regulation and Public Affairs at BBVA; Iberdrola Chairman and CEO Ignacio Sánchez Galán; Repsol CEO Josu Jon Imaz; and Isabelle Mateos y Lago, member of BlackRock Investment Institute.

Different strategies, same objective

The Iberdrola and Repsol representatives explained how their companies integrate sustainable into their decision making mechanisms. In the case of Iberdrola, Ignacio Sánchez Galán explained the “green legacy” that has become a defining trait of the brand. In his opinion, “climate change is everybody’s problem” and Iberdrola is contributing to fight it by using technology to generate energy more efficiently.

Josu Jon Imaz, from Repsol, emphasized the need to “generate more power” in a responsible manner, juggling short-term profit goals with a long-term sustainability vision. In this line, he argued that “sustainability is compatible with corporate competitiveness.” And to achieve this, he explained, “mobilizing and motivating” all employees is essential.

The investor’s vision

Both panelists agreed that corporate sustainability strategies are becoming increasingly important for investors. Isabelle Mateos y Lago, member of BlackRock Investment Institute, confirmed this view, noting that investors are not interested in the policies that companies announce on the matter, but in how they actually implement them in their organizations, in “their inclusion in corporate governance and in the internal change” that it entails.

In this sense, she stressed that companies need to provide “sufficient and transparent” information on their green strategies and back their initiatives with data. For BlackRock, she insisted, it is pivotal to be absolutely certain that sustainability criteria are at the core of companies’ processes.

José Manuel González-Páramo also made reference to the green bonds, i.e. sustainable funding that companies raise from capital markets. An example of this is BBVA’s recently issued green bond, the first-ever by a Spanish bank. According to Iberdrola and Repsol – both companies  have issued green bonds – market reception for this type of bonds is becoming increasingly positive. On the other hand, BlackRock noted the importance of “proving that the bonds are used to fund sustainable initiatives.”

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