Fotis Kourmousis, Executive Member of the Board of Directors of the HFSF
In this context, they also assess the risk of a default on a loan, which also affects the lending rate. This evaluation is based on data and information mainly of financial nature (e.g. balance sheet, sales, costs).
In the framework of the sustainable finance policy promoted by the EU, banks will also assess other types of risks that may affect the financial viability of a business, especially in the long run.
The most important issues affecting the sustainable development of a business are comprised in terms of Governance - Society - Environment.
Particularly:
- Regarding the pillar of good corporate governance: the legality of the company (e.g. existence of licenses, compliance with legislation), transparency (e.g. publication of non-financial information), prevention of corruption and avoidance of bribery (e.g. e.g. legitimate / declared lobbying actions).
- Regarding the axis of support for society: the equality of all people is taken into account (e.g. elimination of gender discrimination), the promotion of diversity (e.g. inclusion of the disabled, autism, ex-offenders), work practices (e.g. .e.g. family-work life balance, telecommuting), the dialogue with the interested parties (e.g. consumer organizations), the support of social actions (e.g. volunteering, sponsorships to NGOs).
- As far as environmental protection is concerned: dealing with climate change (e.g. reducing / offsetting CO2 emissions), the efficient use of natural resources (e.g. water reuse, energy saving of buildings), the use of renewable energy sources ( e.g. photovoltaics), the utilization of waste (e.g. metal recycling), the rescue of biodiversity (e.g. protection of Natura areas).
In order for the above information to be assessed by the banks, companies should adopt a sustainable development strategy integrated into their business model, implement relevant practices and publish an annual performance report, containing their relevant actions and results, as measured by specific performance indicators (KPIs). Besides, the European Parliament recently adopted European Directive 2464/2022, which makes it mandatory for large / listed companies to issue an annual sustainability report (ESG).
In Greece, some innovative companies already publish such ESG reports, where they describe their actions. Companies are approaching ESG issues, both in the context of preventing / dealing with the related risks, as well as taking advantage of the related opportunities, with the aim of differentiating themselves from the competition and innovating.
In Greece, the HFSF Financial Stability Fund recognizes the value that sustainable development and a sustainable economy can bring.
Therefore, it promotes the requirements of the European institutional framework in the banks in which it invests. In this context, it has already developed a series of initiatives and policies in the 4 systemic banks where it is a shareholder, with the aim of adopting, from their side, international standards and best practices regarding ESG issues. As a result, the 4 systemic banks have already adopted the international principles of sustainable banking (PRB) of the United Nations Organization (UNEP FI), while they also issue an annual sustainability report, where they publicize their actions on ESG issues.
