The banks’ contribution in achieving green and sustainable growth

The contribution of banking institutions towards achieving green and sustainable growth, and the application of green credit criteria are essential.

At a round table discussion entitled "Sustainable Finance: The Role of Banks in Implementing Green Credit Criteria", held at the Credit Risk Management Conference, leading executives of the financial landscape analysed the role of their banks in integrating green criteria in the credit sector.

The discussion looked at how banks can finance sustainable projects, promote environmentally friendly investments and minimise their environmental impact through green lending policies.

Demetris Demetriou, Chief Risk Officer, Executive Director of Risk Management at Bank of Cyprus, said banks are aligning themselves to cope. Regarding the environmental criterion, many measures are already being taken by the Bank of Cyprus, he noted. Among them, the use of photovoltaics, recycling and reducing the use of paper, etc.

Regarding the bank’s social impact, Demetriou said it focuses heavily on its staff’s mental health within the work environment, while in terms of governance, he said that the compliance obligation for banks has led to some significant hcanges.

He said businesses have also been affected as there are additional preconditions when it comes to investments. As Demetriou said, this is the ideal time for those wishing to invest, as there is ample liquidity.

The banks have made platforms that help companies to understand the risks, he said, adding that businesses also need to get educated on the management and financing of investments and transition costs.

Dimitris Kolkas, Risk Executive of Eurobank Cyprus said that there is an opportunity for businesses to design strategies that incorporate the three criteria.

As he said, Eurobank Cyprus finances actions such as the purchase of equipment for ESG investments that have to do with renewable energy sources, as well as general type financing for the general needs of companies that, however, contribute to the implementation of the criteria.

Addressing businesses, Kolkas urged them to get to know their staff and the communities in which they operate, stressing that their public image is greatly influenced by the decisions they make. He spoke of a pivotal point at which all sides must make significant changes even in their daily lives.

According to Kolkas, the banks have questionnaires that clients fill out to see where they stand ESG wise. Their answers are used internally by the bank to assess the degree of sustainability and potential weaknesses, and address them.

The banks need to move fast he added, adding that the benefits from good collaboration between the banks and clients are mutual.

Konstantinos Papadimitriou, Chief Risk Officer of Alpha Bank Cyprus, said that ESG criteria are now the key tools to help companies in their continuous growth and sustainability.

He spoke of a new state of affairs that started with the Paris agreement, an optimistic goal and a direction that is not only limited to the environmental aspect but also to other issues such as corporate governance and transparency.

The banks, he added, are being pressured by the regulatory and supervisory authorities to lead the way in this transition. And he said the banks have gained enough experience and knowledge to assist businesses.

The feedback from the market, something that results from filling out questionnaires, is extremely important for the banks, he said a little later.

The moderator of the discussion was the General Manager of Artemis Credit Bureau, Yiannis Tomasides.