Sustainability Strategies

Definition

Sustainability Strategies are any plans or methods for achieving goal, objectives, solutions or outcomes consistent with Sustainability. This entry concerns Sustainable Finance strategies

Motivations

Firms may have diverse motivations for pursuing sustainability strategies:

• Supporting ethical business
• Business opportunities
• Anticipating regulatory changes
• Customer and investor demands
• Anticipating changes in economic and risk factors
• Reputational costs
• Anticipating changes in clients’ behaviour
• Promoting human capital

Examples

• Membership of external networks supporting sustainable finance
• Defined environmental, social and governance objectives
• Published policy statement
• Public endorsement of specific principles (e.g. UN Principles for Responsible Banking)
• Staff training and objectives
• Disclosure following TCFD recommendations
• Development of products such as green bonds and loans, which must be compliant with specific requirements in terms of the use of funds, transparency and close monitoring of the projects that receive the funds (see also the last section of this paper);
• Linking a part of the variable remuneration of general management to qualitative targets, including CSR targets;
• Engagement with stakeholders to promote the contribution of the financial industry to sustainable development;
• Carrying out a social and environmental impact evaluation (together with the traditional financial evaluation) on an individual basis for each loan granted to legal entities;
• Development of metrics for measuring the bank’s clients’ potential energy savings in the context of buildings;
• Introducing sectoral policies in economic sectors with a high impact on the environment and/or that are potentially vulnerable to the transition towards a low-carbon economy, such as energy, mining, infrastructure and agribusiness;
• Granting favourable conditions for credit to companies that are in the process of adopting a circular business model, after performing a technical assessment of the circularity of the business model;
• Involvement in the development and endorsement of the UN Principles for Responsible Banking, which will assist banks in identifying their most significant positive and negative social, economic and environmental impacts;