The economy and its financial entities engage in risks (and opportunities) on their transition path towards a low-carbon and more circular economy.
In this regard, the ECB sees merit in adopting a forward-looking approach by institutions to climate and environment-related risks.
From the outset, the European Union has been working to improve the environment’s quality and to establish sustainable development in Europe. The Green Pact initiative to make Europe the first climate-neutral continent by 2050 facilitates the commitment to sustainability. Within this context of ensuring sustainability we find some examples that constitute the concept of Sustainable Finance; highlighting, without any doubt, the United Nations Environment Programme Finance Initiative, of which most of the significant entities in Spain are part.
The world of finance already hosts a lot of products oriented towards the “green”: green mortgages, Green Lending, green bonds to finance sustainable projects, etc. To the environment, we must add an ethical perspective that considers the social factor, thus constituting the sustainable concept. This is where today we see SRI, Socially Responsible Investments, which, in addition to economic criteria, embrace ESG criteria. In the same vein, ethical banking; with sustainability hand in hand with classic banking.
The financial sector can break the stigma of recent years, with the opportunity to raise awareness in society and contribute to sustainable development. From this point, we return to the point we have made clear: those entities that are able to differentiate themselves and integrate (and encourage the integration of) ESG factors into their business strategy will have a great competitive advantage, which will strengthen their reputation.
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