A speaker in the closing panel dedicated to sustainable businesses at BR’s recent Environmental & Sustainability Summit 2021, Iuliana Tiba, Director Environmental Social and Positive Impact Financing at BRD Groupe Societe Generale, sat down with us for an exclusive post-event interview in which she reiterated the bank’s commitment in financing and supporting sustainable projects.
What is responsible business from a bank’s perspective?
A responsible business is seen through different lens. First of all, it has a good economic performance, and this is the starting point. It should also be a business that aims a positive environmental impact, and which considers social aspects in its whole value chain. Generically speaking it embeds ESG (Environmental, Social & Governance) aspects related to environment and to people in the business model, in the heart of the company, in its governance. So, the business has to evaluate and measure the impact of its activities on environment, on the climate change, and the social impact in relation with its employees, customers, suppliers and the community. We have all an important objective – to decarbonize the economy, to diminish the ecological footprint so we maintain well below the 2 ̊global warming scenario. This objective can be achieved when we all make the effort to see what the real impact is we have and redesign the way we build our products and services, but also how we consume.
There is a role to play by each of us. I want to emphasize the importance of the transparency in this transition and the major role played by new regulation on non-financial reporting which requires to measure and communicate the impact on environment, communities on entire value chain.
We take into consideration all those aspects economics, environmental and social when we analyse a company or a projects we want to finance or when we define our own business strategy or we accompany our clients in this transition to a new business model.
“In our funding, in addition to the economic performance component, it becomes important to analyse the environmental, climate change and social impact on communities.” Iuliana Tiba said during #ESS2021.
How much investment is needed for a company to become a sustainable business?
The transition to a sustainable business, which includes economic, as well as environmental and social objectives, involves first of all a process of internal transformation of redesigning the relations both in the area of suppliers and consumers or customers taking into account the need for the efficient capitalization of the natural capital, for the reduction of the ecological imprint, but also for the potential changes in the preferences and requirements of the consumers.
It may involve investments in the area of innovation, in new technologies, in the acquisition or development of new skills or support services for defining transition strategies or compliance with certain requirements. All this implies a cost for the company, but the long-term results may be reflected in cost reductions (due to low consumption of natural resources or low prices), the emergence of new sources of income (for example from the recovery of waste or by-products, from creation of industrial symbioses, etc.), penetration of new market segments or geographies or obtaining a competitive advantage and a better positioning on the market. It is difficult to quantify the costs associated with an organizational transformation towards a sustainability agenda, but there are certainly benefits for a company to adopt such a model.
In fact, all research shows that reducing the “cost-to-impact” leads to increased profitability, stronger resilience and financial attractivity. Worldwide, ESG-focused companies have not only seen higher returns, but stronger earnings growth, dividends and recognition of their customers and consumers.
Moreover, in the long run, there is also a question of survival for many businesses, in the context of an expected transition to a green and inclusive economy.
How open are banks to this type of financing? How open are companies to this type of investment?
Banks are ready to finance responsible companies or projects. Europe’s objective to become the first carbon neutral continent by 2050, implies a huge effort of the business environment, public authorities as well as of the financial system, in a holistic approach and through a close collaboration. In this equation, the role of banks is essential if we consider that addressing the risks of climate change alone, according to a recent CNSM (Comitetul National de Supraveghere Macro Prudentiala) report on green financing, indicates a volume of public and private investment of about 60 billion euros over the next 10 years, in Romania. Our role is to participate to this economic effort, to design new financial products and to finance businesses that are meeting requirements but also to disseminate good practices and accompany our clients in this process of transformation. The activity in this area is still at the beginning, and there are also big challenges in front of us, banks and companies.
“The 2050 decarbonisation agenda or the adoption of circular economy models require cooperation between businesses, authorities and the financial system in a holistic, participatory approach.” The BRD Director Environmental Social and Positive Impact Financing also said during the event.
As example, the level of climate loans registered by the top 12 banks in Romania, according to the same CNSM report, amounts to approximately 1.3 billion EUR, at the end of 2020.
BRD Groupe Societe Generale is ready to accompany companies engaged in the process of sustainable transformation, the transactions volume of of this type concluded during 2021, amounting to approximately 380 million euros, using a diversified range of financing instruments, from green loans to loans linked to sustainability objectives. The fields of financing were very diverse, from buildings that benefit from green certifications to the field of renewable energy, to eco mobility solutions or medical services.
As conclusion, in Romania the subject is on public agenda and we made important steps forward, but the economic actors need increasing support & expertise to redesign their businesses, especially the medium and small enterprises.
How big is the impact of these investments on society at large?
Investments in sustainability have a direct impact in new jobs creation and in economic growth, in addition to the environmental and social benefits that are not to be ignored at all.
For example, a study conducted in September 2020 by Enel and European House Ambrosseti, entitled “Circular Europe” at the level of the entire European community and focusing on 3 countries, including Romania, illustrates that the circular economy had a contribution of 10-12 billion euros (in 2018), representing 5% of the gross domestic product, led to the creation of a number of 20 thousand new jobs and a contribution of about 570 euros gross domestic product per capita of inhabitant. Therefore, the stake of these investments is a substantial one, with the expectation of registering on an ascending trend.