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Sustainability 13 Feb 2020

The financial sectors’ sustainable partnership with the United Nations is more active than ever

In an interview published in the latest edition of Compromiso RSE, Antoni Ballabriga, Global Director of Responsible Business at BBVA and Co-Chair of the Global Steering Committee for the United Nations Environment Programme Finance Initiative (UNEP FI), stressed that: “The financial sector’s sustainable partnership with the United Nations is more active than ever.” An initiative he feels promotes a financial industry that has a positive impact,  serving people and the planet. “It’s something that it hopes to achieve by inspiring, informing and enabling financial institutions to improve people’s quality of life without compromising that of future generations,” he explains.

The United Nations Environment Programme Finance Initiative (UNEP FI) is a partnership between UNEP and the global financial sector. It was created in 1992 with the goal of turning sustainability into the cornerstone of the sector’s business strategies. It achieves this by promoting methodologies to help banks, investors and insurance companies put into practice the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). In 2019, the international organization presented the Principles for Responsible Banking, a new framework designed to help banks integrate sustainability in their operations, portfolio and strategic.

The cover of the February edition of CompromisoRSE magazine features an interview with Jacki Johnson, President of the Australian Sustainable Finance Initiative— and Antoni Ballabriga, the Global Director of Responsible Business at BBVA. Both co-chair the UNEP FI Global Steering Committee and in the interview, discuss the challenges facing institutions, the financial industry and insurance companies in the transition toward the decarbonization of the economy.

Banks’ role in a sustainable future

Both Ballabriga and the Australian Jacki Johnson agree on the role the financial sector should play in developing a sustainable future. “The financial industry has a lot to say in this transformation process. We are funders and mobilize capital in the markets. We have an enormous responsibility in both the environmental transition process and in the irreversible path toward the decarbonization of our economy. And our role, at least at BBVA, can be summarized in three words: financing the future,” explains Ballabriga.

Antoni Ballabriga: “We need to go one step further, and include climate change risks and opportunities in our strategies and business processes.”

Both directors believe that: “Financial institutions should integrate sustainability into their business strategies. We need to ensure we are taking a long term view that recognizes the relationship between business value and society value.” In Ballabriga’s opinion, they should do so for two reasons. On the one hand, out of respect for the planet and on the other, based on the more traditional business perspective, he explains.

According to Ballabriga, there will be a massive transfer of assets from certain activities and sectors to others, and with it, “an enormous volume of assets will be abandoned. This will probably be the biggest disruption to ever take place for any type of economic activity in the history of mankind.”

Antoni Ballabriga, Global Director of Responsible Business at BBVA and Co-Chair of the Global Steering Committee for the UNEP FI. - CompromisoRSE

Achieving the SDGs and fulfilling the Paris Agreement

The financial sector is facing several challenges to attain the SDGs and fulfill the Paris Agreement. In Antoni Ballabriga’s opinion, banks play a crucial role thanks to their unique position to mobilize capital through investments, loans, issuances and advisory services. “At BBVA, we believe we have a lot of work to do when it comes to the SDGs. In the future, we plan to use our position to create a specific impact on our clients’ behavior, helping them move toward a more sustainable world based on certain development goals,” he explains.

In relation to this goal, Ballabriga mentioned a series of measures and actions that BBVA plans to put into practice. “In terms of climate action, promoting energy efficiency, the circular economy and reducing carbon intensity. And in the field of inclusive growth, mobilizing the necessary investments to build inclusive infrastructure. In this regard, business initiatives will be launched in three categories: financial inclusion, inclusive infrastructure and support for entrepreneurs.”

Antoni Ballabriga: “We are funders and mobilize capital in the markets. We have an enormous responsibility.”

BBVA’s Global Director of Responsible Business also covers UNEP FI’s relationship with regulators and supervisors in the interview.  “There is constant collaboration with NGFS, the Network For Greening the Financial System, which is a network of central banks and supervisors. It recognizes that climate change is a source of financial risk,” he explains.

Raising awareness among consumers

Another fundamental issue is how to raise concern over the climate emergency among consumers. “Guided by our purpose,” Ballabriga says, “we intend for this to reach customers in an effective and progressive manner. By this year, 2020, BBVA’s Group executive chairman Carlos Torres Vila set the goal of all of the banks’ products having a sustainable alternative. Progress made so far for institutional and corporate clients through the Corporate and Investment Banking (CIB) area has been remarkable, positioning us as one of the market leaders in green and sustainable bonds.”

“In any case, at BBVA we go beyond simply not financing certain clients and help them transition toward more sustainable models. Advisory services will be an essential component of the value proposition and fundamental to accompany the change in behavior of our clients and society as a whole,” he continues.

Finally, for Antoni Ballabriga: “This is not about a single bank taking the lead. It requires systematic change. And we need everyone for that.”

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