In the midst of a health crisis, “responsible” finance comes to the rescue

In the midst of the coronavirus pandemic, “responsible” finances, hitherto very present in environmental causes, turn towards the social sphere in aid of the victims of the health crisis that is ravaging the planet.

Proof of this are the billions of “social” debt raised in recent days in the markets to fight the coronavirus.

The Nordic Investment Bank (BNI) opened the road last week with a loan of 1,000 million euros (USD 1,090 million).

This path was then followed by the European Investment Bank (EIB) and the Council of Europe with € 1 billion each.

On Friday, the African Development Bank did the same, with 3,000 million euros.

In turn, Indonesia signed a $ 4.3 billion loan on Wednesday using the “pandemics bond” route.

“We observe a significant change with a growing trend towards social issues,” Agnès Gourc, co-head of Finance and Investment at BNP Paribas CIB, explains to AFP.

“” There are many “operations of this type and” social protection measures are going to become an essential issue, “agrees Sean Kidney, head of the Climate Bonds Initiative, the international benchmark body for responsible debt.

In the criteria called MSG (Environmental, Social and Governance), which serve as the matrix for responsible finance, the “green” part – climate, ecology – has dominated until now.

In 2019, in terms of debt, the pure “green” was clearly the majority and represented $ 216.7 billion against $ 13.95 billion for the social, as illustrated by Gourc.

Although now the social is reinforced, the climate does not stop occupying an important space and continues to interest investors in responsible finance.

Frédéric Gabizon, head of the bond market at HSBC France, gives the example of the French public train company SNCF, which on Tuesday took in 1.25 billion green debt.

“No one loses sight that the current crisis does not change the climate emergency at all,” according to Gourc, who cited last week the conclusion of six “classic” green loans.

“Several studies show that sustainability-based strategies pay off, and that their assets pass the profitability test,” said Isabelle Mateos y Lago, deputy director of sovereign institutions at BlackRock.

According to her, “the crisis generates such a dislocation in the markets that many investors say that it is the ideal time to completely modify their investment portfolios and” add more MSG. “

However, the unprecedented magnitude of the current crisis does not make things easier and it is still early to draw definitive conclusions, experts admit.

“The current context draws all attention to the health risks associated with the pandemic and its consequences,” observes Bernard de Longevialle, Global Head of Sustainable Finance at S&P Global Ratings.

“The economic and financial impact that this pandemic faces us could lead to postponing some of the environmental objectives in favor of more immediate priorities,” he alleges.

“However, the revival plans are going to be an opportunity to invest in green finance to prepare for the future,” he added.

Kidney is also optimistic: “We are already told that sustainable funds have better results and attract capital. If that is so, and my intuition is that it will, it will galvanize the sector.”

“If that had happened several years ago” in a younger market, it might not have worked, Gourc says, “but now the engine is running, and the financial world, investors, regulators have come too far to back down. “