SUSTAINABLE DEVELOPMENT AND ECONOMIC PERFORMANCE: ARE THEY COMPATIBLE?
"Sustainability is increasingly interested in financial markets but we lack projects to invest in", this is the diagnosis of Stephen Nolan, director of the United Nations Network of Financial Centers for Sustainability FC4S (International Network Financial Centers for Sustainability) .
The expert in sustainable financing was the speaker of the conference: "How sustainable development meets profitability?" of the "Facing climate change" cycle of the Re-City platform organized by the Catalunya Europa Foundation with the collaboration of BBVA and the support of the Barcelona City Council, the Metropolitan Area of Barcelona and the Generalitat de Catalunya. The conference was moderated by Humberto Llavador, professor of economics at the Barcelona Graduate School of Economics and the Pompeu Fabra University, and by Antoni Ballabriga, global director of Responsible Business at BBVA.
Stephen Nolan explained to the public that it filled the auditorium of the BBVA headquarters in Barcelona that following the Paris Agreements of 2015, a European group of high level experts in sustainable finance was created to help mobilize resources towards climate action. That meeting was a turning point and since then sustainability has ceased to be a marginal issue for financial markets and investors are increasingly looking with interest at the sectors of the green economy, renewable energy, energy efficiency or the circular economy . Without a doubt, Stephen Nolan is one of the responsible for this change of mentality in the financial world, first as head of the organization Sustainable Nation Ireland, in Dublin, and currently as director of the United Nations Network of Financial Centers for Sustainability. Based in Geneva, which was born in 2017 at the proposal of the environment ministers of the G7, the group of the most developed countries in the world.
90 trillion dollars, the price to decarbonize the planet.
"The objective of the FC4S network is to mobilize the necessary economic resources to comply with the Paris Agreements and the Sustainable Development Goals, we estimate that a capital of 90 trillion dollars will be needed to give a transcendent boost to the decarbonization of the planet, and for Europe about 2 trillion euros in the next ten years", Nolan explained.
With just two years of existence, the FC4S network has not stopped growing and adding new financial centers to their organization. Currently, there are already 22 financial centers such as Paris, London, Geneva, New York, Hong Kong, Dublin or Barcelona that has recently been incorporated through the Barcelona European Financial Center and financial institutions such as BBVA, consultancies and various professional associations. Like this, Barcelona has become the first Spanish city to be part of this important global network.
Sustainable finance, a growing sector.
According to Stephen Nolan, the growth of the network demonstrates "the great interest of the financial world in creating instruments that allow us to promote sustainable finance and face the challenges of climate change". "Sustainability was previously seen as something that the environmental groups defended, but now it has already entered the financial markets. It is not about philanthropy or Corporate Social Responsibility, we are looking at new business opportunities where investors can get a good return. But not at any price, it is not about investments that seek purely economic benefits, Sustainable finance or "green finance" must be based on social criteria and help projects in favor of the decarbonization of industry, the reduction of emissions or the use of efficient technology in the use of natural resources". Some objectives that Nolan believes can only be achieved with a type of governance based on public-private collaboration between governments and financial institutions.
In this sense, Stephen Nolan, gave as an example the case of Ireland, a small country, but with a lot of experience in the field of finance. He knows well since he was an advisor to the Government in that area. There, he promoted the organization Sustainable Nation Ireland with the aim of working for public and private organizations to go hand in hand to advance the transition to an increasingly decarbonised economy. For this, the government estimated that 50 billion euros are needed in ten years. So far, the government has committed to put half, in part thanks to the issuance of green bonds through which have already collected 12 billion euros. A fact that, according to Nolan, shows that "there are many ways to collaborate to invest in projects in the field of environment, sustainability or the circular economy". Clearly, governments can not do it alone because they do not have much money, and therefore, we need private capital". He also set other examples, such as South Africa's great commitment to renewable energy, China with the electric vehicle industry, or improving the energy efficiency of buildings in many countries.
"Sustainable finance is essential in climate action but now our challenge is to reach out to small businesses and retail investors, and stimulate the creation of projects to invest that capital, and in that, governments can help by creating favorable regulatory frameworks", concluded Stephen Nolan. Another pending issue is the need to create a taxonomy that defines what is green and what is not, to unify standard criteria that serve all.
For his part, Antoni Ballabriga, global head of responsible business of BBVA, highlighted the five major factors that he believes have made the sustainable finance sector change rapidly in a few years, and that open new challenges and opportunities. These factors, he said, are the global agenda and the Paris Agreements; the market, which increasingly demands different financial solutions; investors, who prioritize environmental strategies; the increasing pressure of the regulatory world; and finally, technology, which allows us to make a leap forward in democratization and access to new funds and projects".