Green or sustainable financing: an opportunity for Spanish companies

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Sustainable financing is based on the principle that investments (the channeling of capital) must be aligned with ethical and environmental criteria. It is a key factor to achieve the well-being of the planet and people.

In this article we share with you why sustainable finance represents an opportunity for companies, what are the advantages of implementing this type of practices and the mechanisms to obtain financial resources that allow sustainable projects to be carried out.

Green loans and sustainable financing
Green loans and sustainable financing

What does sustainable finance mean?

Although there is no formal definition for the concept of sustainable finance, we could indicate that it is about raising resources in order to develop activities based on environmental, social or good corporate governance (ESG) criteria.

Thus, financial sustainability is not limited solely to green financing, that is, to raising capital to undertake or mature projects related to the environment. The term is broader; encompasses the 17 UN Sustainable Development Goals.

 

Opportunities and advantages of sustainable financing

As you can imagine, the implementation of ESG criteria within businesses entails a refocusing of business culture and strategy.

However the report published by the Spanish Observatory of Sustainable Finance (OFISO) referring to the year 2023 (published in 2024) indicates that it is a market in continuous growth. Sustainable financing in Spain reached 60,788 million euros, which is 1% more than the previous year.

Globally, capital allocated to sustainable projects increased by 31Q3T, reaching 853.2 billion euros.

It is estimated that the numbers will continue to increase, due to support from public powers and greater social awareness on the part of the population. 

In principle, we must highlight the implementation of policies and regulations to comply with the Agenda 2030 and the Paris Agreement They promote the development of sustainable projects and facilitate the ability to obtain the necessary resources. Specifically, the European Comission It has a roadmap to expand and enhance sustainable financing tools.

On the other hand, the assets of socially responsible funds in Spain reached 118,256 million euros, which represents 34% of the total volume; and highlighting investor appetite for companies seeking sustainable growth.

Advantages of adopting socially responsible policies

In summary, if Spanish companies are able to comply with sustainable standards and balance their financial profitability with ESG criteria, in addition to being able to obtain capital, they obtain the following advantages:

  • Increase in demand, due to greater collective awareness for the environment and social justice.
  • Opportunities to open new lines of business, diversify and generate additional income.
  • Improvement of energy efficiency (the use of green energy and waste management, although it requires an initial investment, lowers operating costs).
  • Contribution to the energy transition, the fight against climate change and pollution of the planet.
  • Improvement of corporate reputation and company image.
  • Strengthening internal business culture.
  • The risk of sanctions and lawsuits as a consequence of regulations in this matter is avoided.

What types of sustainable financing can companies opt for?

Although investment funds build their portfolios with listed assets, there are also private equity funds that are reorienting their strategies towards sustainability. Not only stock markets and financial markets channel investment.

In fact, the Official Credit Institute (ICO), through the asset manager Axis, has financial instruments that promote the creation of venture capital and private equity funds with sustainability criteria.

In reality, sustainable finance can cover a wide spectrum of financial solutions, apart from the contribution of capital by socially responsible investment (SRI) funds. Companies can also use credit.

The most used formulas to obtain sustainable credit are:

  • Green bonds: They are a type of debt, instrumented in securities, in which the funds obtained are committed to the development of projects related to climate change. That is, they must have a specific purpose and this must generate a positive environmental impact.
  • Social bonds: In the same way that green bonds are responsible for financing environmental initiatives, social bonds are those that raise funds for projects that generate a positive social result through the issuance of debt. 
  • Bonds linked to sustainability: In this case, the financial resources obtained through the issuance of debt must meet one or more specific sustainability objectives.
  • Green loans: Green credit is another type of sustainable financing in which the resources obtained must also have a positive impact on the environment. Unlike green bonds, this type of debt is not instrumented in securities; This is a loan contract.

Who can issue a green bond?

Any entity, whether public or private, with the capacity to assume debt can carry out an issuance of green bonds (or bonds in general). However, it is necessary to carry out certain steps:

  • Plan the operation and define the purpose of the project to be financed.
  • Prepare all legal documentation and deliver it to the control agencies.
  • Obtain a credit rating.
  • Disseminate information among investors.

The company can hire an investment bank to distribute the bonds among investors; these entities also provide support during the issuance process.

However, if you want to take advantage of the opportunities that sustainable financing offers to companies, you can contact Alter Finance and we will help you determine which is the most appropriate solution for your needs, as well as execute it.

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