Sustainable finance is a broad concept, which includes the gradual incorporation of environmental criteria, but also social and governance (ESG) when it comes to originating loans and making investments.
On the other hand, green bonds They help raise funds for projects that mitigate climate change.
These concepts began to gain strength from 2015, after the Paris Summit, where the importance of reducing emissions and avoiding an increase in global temperature was recognized.
In Argentina, gradually – especially in the last year – initiatives began to form that seek to incorporate this concept into the macroeconomy through experiences such as the Sustainable Finance Protocol of Argentina.
One of the signatory banks was Galicia Bank. In this opportunity, in dialogue with Sustainable Economy, the entity explains how these issues are incorporated into the local financial sector.
“As part of our initiatives in sustainable finance, in 2019 we formed, together with 17 banks, the Sustainable Finance Protocol of Argentina”, says Constanza Gorleri, Sustainability Manager of Banco Galicia.
This protocol identifies sustainability as a guide for the financial sector, seeks to facilitate and encourage financial institutions in Argentina to implement the best international practices and policies that promote integration between economic, social, and environmental factors, to move towards sustainable development of the financial industry.
Therefore, what does the Protocol mean ?: “It is a framework agreement that represents a starting point for the creation of triple impact business models, seeking not only to be profitable, but also to generate social impact and care for the environment. , guaranteeing sustainability in the long term ”, explains Gorleri.
Regarding the protocol, the signatories committed to work on four strategic axes:
- Develop internal policies to implement sustainability strategies.
- Create financial products and services to support the financing of projects with a positive environmental and social impact.
- Optimize current risk analysis systems with an environmental and social focus.
- Promote a culture of sustainability.
Also during 2019, he became one of the founding signatories of the Principles of Responsible Banking. driven by the Financial Initiative of the United Nations Environment Program (UNEP FI), committing ourselves to strategically aligning the business with the Sustainable Development Goals and the Paris Agreement on Climate Change.
By signing the Principles for Responsible Banking, the Bank joined a coalition of 130 banks worldwide representing more than USD 47 trillion in assets, committing ourselves to assume a decisive role to help achieve a sustainable future.
“Through these principles, we commit to using products, services, and relationships to support and accelerate the fundamental changes in the economy and lifestyles necessary to achieve shared prosperity for current and future generations.”
The Responsible Banking Principles are backed by an implementation and commitment framework. By signing them, the Bank is committed to being transparent in both its positive and negative impact on people and the planet.
At this point, Gorleri indicates: “We will focus where we have the greatest impact from our activity to establish, publish and implement ambitious objectives to expand the positive impacts and face any negative impact in accordance with global and local objectives.”
Linked to green bonds, in 2018 they issued the first Green Bond from Argentina’s private sector to raise $ 100 million in order to expand the loan program for environmental efficiency projects. This bond was subscribed by the International Finance Corporation (IFC), an institution of the World Bank Group.
“Through the Green Bond we offer our clients an instrument that allows financing different types of projects, but with a common denominator: combating climate change,” says Gorleri.
In this way, it seeks to finance projects that promote an improvement in the environment, through the following initiatives:
- Renewable energy
- Energy efficiency (such as new and renovated buildings, energy storage, district heating, smart grids)
- Sustainable construction (green buildings that meet recognized LEED standards or certifications)
- Increased efficiency in the use of water. As of December 2019, 16 projects were financed for a total amount of US $ 53.33 MM.
These projects are expected to reduce greenhouse gas emissions in Argentina by approximately 157,500 metric tons of CO2 per year, the equivalent of removing 33,700 cars from the streets.
The antecedent of this bond is the agreement with IFC for US $ 130 million, granted in 2016, for the Bank to extend its long-term financing to small and medium-sized companies and develop a new program aimed at financing renewable energy projects in Argentina.
Date published: Apr 1, 2020